The financial press reported this weekend on the increasing popularity of ‘Joint Borrower Sole Proprietor’ (JBSP) mortgages, which allow the income of family members – usually parents – to be taken into account, while the property title is held only in the child’s name.
Brokers in the Times and Financial Times said that inquiries had increased in recent months, and particularly since the stamp duty exemption for first-time buyers was announced in the November budget.
The exemption means that first-timers do not have to pay stamp duty on properties costing up to £300,000, or on the first £300,000 of properties worth up to £500,000. A joint purchase between a homeowner and a first-time buyer would usually mean missing out on this tax break, and could also result in the homeowner paying a 3% surcharge for owning a second home. JBSP mortgages avoid this.
Only a small number of lenders currently offer mortgages on this basis, and criteria surrounding maximum lending age, so the age of the parent could limit the mortgage term considerably. Building societies can be more flexible however.
Elsewhere there were calls for borrowers to act quickly and grab a good deal while they still can. The Mail on Sunday highlighted the Bank of England’s ‘Term Funding Scheme’, which allowed lenders to borrow low-cost funds in order to offer competitive rates to borrowers. This scheme comes to an end this month, and lenders must begin to repay the money.
This coupled with speculation that the next interest rate rise could take place as early as May could signal the end of rock-bottom rates, so homeowners should review their mortgage options now if they are able to.
What the papers said about rate changes and the Bank of Mum and Dad