Income Boost Mortgage

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Income Boost Mortgage

Income Boost Mortgage

Hemat explains what an income boost mortgage is and how it can help people achieve their property goals.

What is an income boost mortgage and how does this work?

Income boost is where you can have someone else coming onto the mortgage with you, but not owning the property. They can help with the affordability of the mortgage and allow you to buy that property. It’s also known as a Joint Borrower Sole Proprietor mortgage.

What are the criteria requirements for an income boost mortgage?

This kind of mortgage helps clients borrow enough money for a home by letting them add someone else to the mortgage – usually a family member. It can be useful for First Time Buyers, people on low incomes or those moving home. 

We will examine the scenario of what you need to do. Let’s say you had a family and you live in a one bedroom flat. You may want to upsize to have another room – but you can’t afford that mortgage. You could then ask mum or dad to come on the mortgage with you to help boost the affordability. 

We do ask a lot of questions, because we need to confirm who will be paying the mortgage and the incomes of everyone involved.

How do lenders check affordability?

When you add a family member, or a friend with some lenders to the mortgage you will all be liable for paying it. But only you will own the property and be named on the title deeds. That person is called the owner borrower. The family member or friend is the non-owner borrower. 

It works in the same way as a standard mortgage. We ask both applicants for their income documents, credit reports and bank statements and we’ll do the affordability checks. We also check eligibility – as not all lenders do this type of mortgage. 

Are there many lenders in the current market who offer income boost mortgages?

[Podcast recorded in February 2024]
In preparation for this I had a quick search and at the moment there are 35 lenders offering Joint Borrower Sole Proprietor mortgages. There are 41 that won’t do it, for various different reasons. 

It is a complicated mortgage and it requires specialist advice. Imagine you bought a car. Let’s say it’s a Ferrari, because I’m a Formula One fan. Imagine being liable for the monthly payment on that Ferrari, but you don’t own it and you can’t drive it. 

That’s how these mortgages work – so you really need to be sure about being jointly committed to that loan. You need to get independent legal advice as part of the process. 

Can you give an example of how it works?

Let’s imagine a customer, George, who wants to buy his first home. George earns £30,000 and needs a £150,000 mortgage. The maximum loan he’ll be offered will be around £110,000 – which is £40,000 short. 

George’s mum earns £60,000 and she is happy to go into the mortgage with him as a Joint Borrower Sole Proprietor. She won’t live in the property with George and will not own it. She’s got a mortgage-free property herself. By adding mum on, George can now get the £150,000 mortgage. It means he can buy his first home. 

They’re both liable for the mortgage payments and named on the mortgage. George’s mum needs to be very sure that he will pay the mortgage. Only George will own the property. 

We always ask a secondary question – will mum contribute to part of the mortgage? Technically, George isn’t able to afford the mortgage on his own and that’s why lenders limit the borrowing amount. That’s a conversation George and his mom need to have. 

Mum will also need independent legal advice to check she knows what she’s doing. She’s going on a mortgage, won’t own any of that property but will still be liable for that loan if George does not pay. 

That’s why lenders will get solicitors involved to ensure that George’s mum has had the right advice. If things go wrong, she would be liable to pay the mortgage, and if not, her credit score would suffer. We make sure people understand that. We never want anyone to have any nasty surprises. 

Speak To An Expert

It doesn’t cost anything for a chat, it’s free and we never charge a fee until we’ve got a mortgage offer. So pick up the phone and let us take it from there.

Can you get an income boost if you have bad credit?

Yes, you can. There are lenders that take all different forms of credit profile. When we’re applying for the mortgage, we’ll ask you for these details as part of the research. 

We will confirm whether you’re eligible with those lenders or not. Just let us understand your credit situation and we’ll be able to advise you accordingly.

Can you get an income boost on a Buy to Let mortgage?

Yes, there are some niche lenders that will allow that. We’ve recently had some First Time Buyers that are comfortable living at home. They’re not planning to move out but they want to invest in property. 

We can do a First Time Buyer Buy to Let on a Joint Borrower Sole Proprietor basis. At the time of recording in February 2024 a couple of lenders will do that. 

Lenders sometimes will change their criteria and the goalposts, so it’s always best to speak to us. Let’s understand your circumstances and then can advise you accordingly. 

Is there anything I need to be aware of when I come to remortgage my property on an income boost mortgage?

We might be using this type of mortgage to borrow some extra funds for a particular purpose. You may own the property by yourself right now, but you need to borrow some extra money. Mum and dad might agree to come onto a mortgage with you to borrow that additional amount. It works exactly the same way. 

Do you pay stamp duty with an income boost mortgage? 

I have to be careful because I’m a mortgage and protection advisor, not a solicitor and I don’t give stamp duty advice. For specific information you need to consult a licensed solicitor or conveyancer or go on to the UK government website to confirm that. 

Typically, though, for a First Time Buyer on a Joint Borrower Sole Proprietor mortgage, stamp duty will be at First Time Buyer rates. The stamp duty will be based on the owner borrower. The non-owner borrower’s circumstances won’t come into play when calculating the stamp duty. But again, check and confirm with your licensed solicitor.

What are the pros and cons of an income boost mortgage?

We demonstrated the pros in the earlier example, where George can now buy a house he couldn’t otherwise afford. It allows you to get the mortgage you need to purchase your ideal home. 

In terms of the cons, let’s say that two years down the line he needs to remortgage and George’s mum wants to to come off. He could be stuck there – because he has got to be able to afford the mortgage on his own for George’s mum to come off. 

George’s mum might also be stuck. She might need to remortgage her own place, but because she’s got this commitment with George she can’t do what she needs to do. 

You might not be able to remortgage away to a different lender either, if other lenders won’t lend you the amount that you need. Obviously, with this type of product you don’t have access to the whole market. You’re limited to lenders that do Joint Borrower Sole Proprietor mortgages. 

How do you apply for an income boost and how can a mortgage broker help?

Typically, you just come to us and tell us what you want to do. Usually when we get these mortgages, it’s started with a customer coming to us where we’re not able to get them the property that they want. We’ve then asked if someone might be willing to come on the mortgage to help with the affordability. 

Not everyone has the luxury of being able to add someone as a non-owner borrower. There’s a lot of liability on that person. 

In some cases another option is to group together with friends. One lender will allow up to six people on a mortgage – where one person owns the property. But those five other people must be really close friends to do that. 

You can also have two out of the six as owners or even three out the six. All six could even own equal shares. 

That’s an unusual situation. But whatever the plan is, we will take you through all the details. We would interview the non-owner borrower to find out their circumstances and explain what’s involved. So it is a bit of a longer process. But it can be so worthwhile because the owner borrower is able to get what they desire. 

We always check that the owner borrower is able to repay the mortgage – because homes may be repossessed if you can’t keep up to date with your monthly payments. We also do budget planners to make sure everything’s sensible and things are going to be OK. 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS. 

Why us?

Our Approach

Personalised – there is no ‘one size fits all’ when it comes to property advice. Your needs are not the same as anyone else’s and nor is our advice. We spend time getting to know you and your motivation for purchasing a property. 

Choice – we’re a mortgage broker, so we have the widest possible range of options. 

Technology and expertise – we use a combination of cutting-edge tech and 35 years of good old-fashioned financial expertise to find the right loan for your circumstances. 

Efficient – we admit it, we’re a little bit obsessed with streamlining. Our inspiration is Formula One – did you know that in 1950 a pitstop took 67 seconds? Today it takes 2. The difference? Organisation, training, and tools. We’ve learned from that and have streamlined our processes to get you into your property faster and hassle-free. Our case studies speak for ourselves!