Broker searches for single proprietorship mortgages (JBSP) have doubled in the past two years, according to data shared exclusively with Mortgage Solutions.
In February 2020, 415 advisers were looking for mortgages, in 2021 this figure rose to 692, before reaching 940 in 2022, according to broker research tool Knowledge Bank.
JBSP mortgages allow third parties to contribute to a mortgage, but they will not be named on the title deeds and will have no legal interest. This allows the named borrower to access more money and get help with repayments, without having to share ownership of their home.
They are most often used by first-time buyers who cannot afford to buy a property on their own, but have a funder, such as a relative, who can add their weight when valuing. of affordability given the increasingly high financial bar that most first-time buyers face.
David Hollingworth of L&C Mortgages said: “JBSP has become a much more widely available product as lenders recognize it could play a bigger role for today’s first-time buyers.
“The pandemic has only seen house prices rise again, which is unlikely to remove the reliance on Bank of Mum and Dad.
“Lenders will generally prefer parents to increase their borrowing capacity by being a co-borrower rather than sitting in the background as a guarantor, but this has potential stamp duty and tax implications. on capital gains.
“As a result, JBSP is a product that will potentially find a wider audience as early adopters continue to ponder how to get that first step on the ladder.”
Rob Peters, Director of Simple Fast Mortgage, added: “JBSP is the modern equivalent of a securing mortgage, widely offered by a number of mortgage lenders, including some on the high street, although with different criteria regarding maximum age and occupancy rules. As a firm specializing in real estate credit, we use JBSP quite regularly with our clients.
More independent borrowers are using JBSPs
It’s not just first-time buyers who use offers. Self-employed people trying to use family help to get mortgages after the pandemic are a growing sector of borrowers, according to Knowledge Bank.
Chief Operating Officer Matthew Corker said: “We are seeing growing interest from independent borrowers.
“This comes as a range of new products have emerged for those with smaller deposits: the return of 95% to value (LTV) mortgages and shared equity loan providers such as Proportunity offer another way to buy.
“This, coupled with the difficulties experienced by those who have recently become independent, may be driving searches for JBSP products.”
Rhys Schofield, managing director of Peak Mortgages and Protection, has seen an increase in the popularity of JBSP mortgages for other purposes.
He said: ‘We see them quite often where maybe an unmarried partner already owns a house that they want to keep, but their new partner is a first-time buyer.
“If they’re both on the title deed, they’re required to pay an additional 3% of the purchase price as stamp duty, so it’s a really nifty way to use the two incomes for l mortgage affordability without getting hammered on duty.”
Despite growing popularity, there is room for more vendors in the market, according to Schofield.
He said: “I wish more lenders would offer them as it’s still a bit of a niche market, but some lenders have made a very strong name for themselves offering JBSP. Skipton and Barclays tend to be our most commonly used lenders. »
Not a magic bullet
However, Lewis Shaw, owner of Shaw Protection Services, hasn’t seen a noticeable increase in demand.
He said, “JBSP for me personally is on the same level as them. They are not the magic bullet, many people think they are often due to the age of the oldest applicant, which then reduces the maximum mortgage term.