There’s a new first-time buyer solution on the block – the Family Backed Mortgage from NatWest has been launched today and allows customers to buy a home with support from a loved one.
Under the offering, eligible customers can apply for a joint mortgage with a family member or friend, while still buying the property in their own name.
The product comes under the category of Joint Borrowers Sole Proprietor (JBSP) which is a way of helping first-time buyers onto the property ladder using family support but without the assisting party having to go on the deeds.
The NatWest Family-Backed Mortgage aims to boost the amount a customer can borrow by combining their income and the income of a family member or friend.
As an example, a first-time buyer earning a £28,000 salary with a 10% deposit can borrow up to £124,450 through NatWest’s standard mortgage products. This example first-time buyer would have a budget ceiling of approximately £138,000 when looking to buy their first home.
However, if they used the NatWest Family-Backed Mortgage however, they could add a family member or friend to the mortgage. If, for example, the family member or friend earned £45,000, this arrangement would instantly increase the First Time Buyer’s maximum borrowing potential to £246,000, giving them a property budget of approximately £273,000.
The family member or friend who is added to the Family Backed Mortgage will be required to obtain independent legal advice before entering into the agreement.
NatWest said, to ensure customers had the confidence they could afford their mortgage over the long term, it has changed the stress rates. This means a typical family would be able to borrow up to £33,000 more, whilst still applying long-term stress rates to guard against future interest rate rises.
Barry Connolly, managing director of homebuying at NatWest, said: “We are committed to providing more pathways to home ownership and helping first-time buyers to achieve their goals.
“Today’s launch of the Family-Backed Mortgage boosts the borrowing power of prospective homeowners by enabling them to combine incomes with a family member or friend, while retaining independence to own a home in their own name.
“In addition, we also announce that we have revised our affordability rates for mortgage customers, boosting the borrowing potential of hundreds of thousands of potential homeowners, whilst continuing to ensure that they can afford their mortgage over the long term.
“We believe that this twin announcement can help instil hope amongst our customers that their dreams can be realised.”
