Joint Borrower Sole Proprietor loans, which are most commonly funded by the Bank of Mum and Dad, emerged as the most searched for residential mortgage according to data from Knowledge Bank.
The mortgages allow close family members to help with a mortgage application. The idea is by bringing in parents or grandparents to assist with the purchase, first-time buyers or younger borrowers with lower salaries can gain the benefits of a joint owner.
However, with this particular mortgage, the second applicant is not named on the title deeds so they don’t face the financial implications – such as paying stamp duty surcharges – of owning two homes.
The most common source of these funds is the Bank of Mum and Dad, with many parents using their income to benefit the application.
Knowledge Bank provided the data from its Criteria Activity Tracker which assesses the terms brokers are using to help their clients find a suitable mortgage.
It uses six lending types with over 70,000 pieces of criteria from over 100 lenders on its system. According to the data for August, after Joint Borrower Sole Proprietor mortgages, the next most popular searches were for ‘the maximum age allowed at the end of the term’ and ‘maximum loan-to-value’. There was also a frequent search for lenders who would allow capital to be raised for debt consolidation.
Interest rate hike
Nicola Firth, CEO of Knowledge Bank, said the rise in interest rates from 0.5% to 0.75% by the Bank of England in August had made an impact on the kinds of searches its brokers were carrying out.
“Feedback from brokers over the month suggests that because of the base rate increase borrowers have a greater than before level of uncertainty about the products on offer and their ability to qualify for them,” she said.
“Coupled to this is evidence of a raft of lenders tweaking and refining their criteria in tandem with price changes as a result of what is only the second base rate rise in over a decade.”
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