Help your family with a mortgage deposit and still make an investment return

Do you have successful BTL property investments but now want to help your Son or Daughter get on the property ladder? If you use a BTL mortgage, you may have discovered that many lenders will not allow you to let your property to an immediate member of family. You may have wanted to ‘lend’ the deposit to be told it could only be a non-refundable gift, or it would not meet the lender’s criteria.

What about second property stamp duty?
If your purchase the property in your name, it will be subject to second property stamp duty tax at 3%, which could be avoided if the property was held in just your son or daughter’s name and they are a first-time buyer.

A particular type of mortgage in the market can help with all the above. You may have already heard of ‘Joint Borrower Sole Proprietor (JBSP)’. This means the mortgage application is completed in both the parents and children’s names, but land registry just in the children’s names, meaning only they legally own the property. If the children are first time buyers, then no second property stamp duty will apply.

Parents can assist their children onto the property ladder either with the deposit, additional income to support affordability or both.

Why is this good for property investors?
The newest generation of ‘JBSP’ mortgage goes one step further and allows parents or other family members to have a legal ‘equity stake’ in return for their contribution towards the deposit or monthly payments. Property investors can then have the win-win of helping their family and saving stamp duty while still getting a return on their investment.

This type of mortgage is not even restricted to immediate members of family. If you have a more distant family member or a friend you want to help buy a property, you can do so without having to gift money to them as the sum of money you help them with can be treated as equity or even a repayable loan.

This is all set up legally by the lender, so you know precisely your share of the property’s future value when you help your family or friend get their dream home.

Our new lender is on a mission to make all homeownership more accessible. They are building new ways to help people onto the property ladder from boosting affordability or smarter ways to get deposit help.

Features, explained:

Income Booster
A family member added to the mortgage?

  • Add an income booster to your mortgage to boost your borrowing power!
  • Your immediate family members can act as income boosters: parents, grandparents, siblings, aunts, uncles!
  • How the monthly payments are divided is flexible and in your control!
  • An income booster can contribute to the payments and build up an equity stake in the home or they can choose to be on standby.

Deposit Booster
A secure loan from family or friends?

  • Deposit boosters help with your deposit through a deposit loan or an equity loan!
  • A deposit loan is a simple, interest-free loan – boosters get back exactly what they but in. Our lender provides the legal agreement and manages the loan repayment, all free of charge!
  • With an equity loan, boosters get a financial interest in the property and their stake can increase or decrease in line with the property value!
  • Deposit or equity loans can be turned into a gift, any time.

Home Agreement
A new way to own a home?

  • With our lenders agreement, you (and your income boosters) can own together, with individual equity.­
  • Our lender dynamically tracks everyone’s ownership stakes based on what they’ve contributed towards the deposit and monthly payments!
  • You and your boosters can adjust who pays what every month, change bank accounts, adjust payment dates, make overpayments, and more, from our lenders dashboard.

To speak to an adviser who will chat through your options about how this can help you and your family or friends, with no initial fee or obligation, contact us now