"JBSP and the buy-to-let sector may seem like odd bedfellows at first glance, but in practice this form of lending can prove incredibly useful."
It’s little wonder that so many buyers have had to turn to help from their friends and family in getting onto the housing ladder (and, truth be told, lenders have been creative and innovative in designing products to accommodate this need for family support). A perfect example has been the rise of products such as joint borrower sole proprietor (JBSP) mortgages.
At The Mansfield, we have seen first-hand what a valuable tool JBSP mortgages can be for those taking their first step onto the ladder, and its popularity amongst brokers and borrowers alike. However, JBSP can be utilised in far more ways, not just to support struggling first-time buyers, especially if, like The Mansfield, lenders extend this flexible approach to other lending segments.
Indeed, JBSP can be an excellent option for landlords too.
A different approach for landlords
JBSP and the buy-to-let sector may seem like odd bedfellows at first glance, but in practice this form of lending can prove incredibly useful.
For example, some lenders may subject first-time landlords to higher interest rates and more costly fees to counter-balance the risk involved, with the borrower paying the price.
However, that would-be landlord can sidestep this issue through a JBSP mortgage, should they purchase alongside a parent or loved one who is already involved in the rental sector.
There can be tax benefits too. Take a married couple, where one partner is an additional or higher rate taxpayer, while the other pays the basic rate of Income Tax, or is a no-tax payer. Through a JBSP mortgage the couple may be able to purchase a buy-to-let property in the name of the lower earner, ensuring a more tax efficient return on their investment.
Flexibility pays dividends
Using JBSP for buy-to-let is a useful example of how a more flexible approach from lenders can help more clients access the funding they need. There’s nothing necessarily complex about lending in this way, and yet some lenders take such a prescriptive approach to their criteria that they would not even consider it.
In fact, all too often lenders are happy to turn away from cases where there is any perceived complexity, whether that’s the client’s employment status, income streams or the nature of the property used as security. This is unnecessary though - there are perfectly good borrowers, with acceptable circumstances, who are unfairly denied funding because of the rigid attitude of some lenders.
At Mansfield Building Society, we pride ourselves on doing things differently, and that means embracing a more flexible and versatile approach to assessing cases.
Rather than look for immediate red flags that allow us to say no, our underwriters are encouraged to get to grips with the nuances of each case so that they better understand borrowers as individuals and what they are looking to achieve.
We firmly believe that advisers value lenders that go the extra mile and that by being more flexible with cases (which might ordinarily be labelled as ‘complex’) we will win the hearts and minds of brokers now and for the long term.