The West Brom BS has announced today that it has expanded its product range with the launch of a new type of Assisted Mortgage.
The new product will work by using additional income from a nominated sponsor to support the repayment costs.
Unlike a more commonplace joint mortgage, the Assisted Mortgage only has the main applicant registered as the owner of the property and is designed for borrowers who have the funds in place to put down a suitable deposit for a home, but wouldn’t yet be able to afford their monthly repayments without help.
David Taylor, the West Brom’s head of products, said: “We are looking to provide a solution for people whose current income is limiting their ability to proceed with the purchase of the property they want.
Rather than delay their plans, we can consider allowing them to seek assistance from someone they have a close relationship with, such as a family member, who becomes their sponsor. By combining incomes, the applicant becomes better positioned to qualify for a loan.
Since they are joint borrowers, both parties are liable for the repayments, but only the applicant takes actual ownership of the property. Over time and as their personal earnings increase, we would expect the applicant to eventually assume full responsibility for the mortgage and the sponsor to step away.”
Rates for the West Brom’s Assisted Mortgage start from 2.34% for a two year fix at a maximum loan to value (LTV) ratio of 90%. A fee of £499 is payable upon completion. Borrowers who do not wish to pay a completion fee can opt for a two year fixed rate of 2.69% (up to 90% LTV) and will also benefit from a cashback payment of £500.
The maximum loan size is £500,000 and early repayment charges apply. There are remortgage options available for existing borrowers with the same rates and product features.
Although clearly of use to a buyer looking to purchase their first home, the Assisted Mortgage is not exclusively for this market sector.
David added: “There are other situations where this type of product could be beneficial, for example a change in a borrower’s personal circumstances which temporarily affects their affordability.
As a building society, we are here to help customers fulfil their ambitions of home ownership and sometimes that will require a more flexible and innovative approach, while still ensuring we continue to lend responsibly.”