BROKERS have welcomed the launch of a new “up to 100%” loan-to-value (LTV) Joint Borrower Sole Proprietor (JBSP) mortgage product by Metro Bank, but cautioned that it “needs very careful advice” as close family members “are taking on a significant financial commitment”.
One said he is “seeing significant demand for this type of mortgage” but another said he believes it will remain a niche given the lending criteria.
The Metro Bank mortgage allows customers to borrow over 95% and up to 100% of the value of a property, providing they have an immediate family member such as a parent to act as the Joint Borrower in the event of a missed payment or change in financial circumstances.
Lending will be subject to Metro Bank’s affordability checks and borrowers will need to meet enhanced eligibility requirements.
Irrespective of whether people borrow direct or through a broker, they will receive specialist mortgage advice before applying for the product.
Both the borrower and the joint borrower will be deemed liable for the repayments, but the borrower will retain all rights to the property with the joint borrower stepping in as a safety net to cover the cost of repayments if required.
The new mortgage, which has no product or valuation fee, will be available across 5-year fixed rates, have a 5-year minimum term and a maximum term of 35 years.
The Joint Borrower must be an immediate family member such as a spouse, parents and grandparents, children and grandchildren and have their own source of income outside of their pension and any other benefits.
Charles Morley, Director of Mortgage Distribution at Metro Bank, said: “For many first-time buyers today, getting on the property ladder can feel impossible, and family members often want to do anything they can to help.
“Acting as a Joint Borrower provides a way for immediate family to be that support without watering down the ownership of the property or being asked to provide a deposit.
“At Metro Bank we understand the importance of lending responsibly while continuing to be innovative and challenging, and we’ve carefully developed our mortgage product with this in mind.”
Doug Miller, Director at Bath-based Lansdown Financial Services, said the product is in demand and will be welcomed by families looking for ways to help first-time buyers (FTBs) overcome affordability challenges.
He added: “These types of mortgages have replaced the traditional guarantor mortgages of previous years, and offer family members the opportunity to help first-time buyers get onto the property ladder.
“We have seen a significant increase in demand for JBSP mortgages as property prices continue to rise and affordability has become stretched.
“A 100% JBSP option will undoubtedly open the door for some buyers who would otherwise be locked out of the market, but it also increases the importance of robust affordability assessments and clear advice for everyone involved.
“Parents or family members acting as joint borrowers are taking on a significant financial commitment, so it’s essential they fully understand the risks as well as the opportunities.”
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, said JBSP mortgages “can be an excellent solution where affordability is the barrier rather than the deposit”.
He continued: “One of their biggest strengths is that parents can help children onto the property ladder without giving up ownership of the home or becoming a legal owner themselves.
“However, while the 100% lending figure will grab the headlines, that shouldn’t distract from the real question: is it the right solution for that family? Like any mortgage, borrowing more is only sensible if the repayments remain comfortable should circumstances change.”
Samuel Mather-Holgate, Managing Director at Swindon-based Mather and Murray Financial, also welcomed the new product but said borrowers need to enter into it with their eyes wide open.
He said: “JBSP mortgages can be a useful way of helping first-time buyers onto the ladder, and we do see interest in them, especially where parents want to support without being added to the property title. But 100% lending makes the risk much sharper.
“The parent is not just offering moral support, they are jointly liable for the mortgage. If payments are missed, it can affect their credit file, future borrowing and retirement plans.
“It is good to see innovation, but this needs very careful advice. The big question is not just whether the buyer can get the keys, but what happens if rates rise, income falls, or the parent later needs borrowing of their own.”
Tracey Dixon, Owner at Cardiff-based Pure Mortgage and Protection, said JBSP mortgages can be a “real lifeline for some first-time buyers struggling to save a deposit, particularly where affordability is strong but family support is available”.
She added: “Just because someone can borrow 100% doesn’t necessarily mean they should. Buyers still need to budget for the ongoing costs of homeownership and ensure they have enough financial breathing room once they move in.
“It’s also vital that parents understand they aren’t simply acting as a guarantor. They are jointly liable for the mortgage if the borrower can’t make the repayments, so it’s important they fully understand the commitment before proceeding.
“These products can work well in the right circumstances, but only where both parties fully understand the responsibilities involved and have taken appropriate mortgage advice.”
Richard Davidson, Mortgage Advisor at onlinemortgageadvisor.co.uk, described the launch as “good news because, for most of the people we speak to, the problem was never whether they can afford a mortgage, it’s that they can’t save a deposit while handing over most of their income in rent every month”.
He continued: “What’s smart about it is that it works off affordability rather than a big cash gift. We’ve had years of the Bank of Mum and Dad, but a parent in their early 50s isn’t always sitting on a pile of spare cash.
“They’ve often still got their own mortgage, they’re facing smaller pensions than their parents had, and they may inherit less because people are living longer.
“This lets that parent support their child with their income and stability rather than a deposit they simply don’t have, which is exactly the kind of help a lot of families actually need right now.”
Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, was less convinced, saying that while JBSP mortgages are great in theory, in reality few borrowers take them out.
He added: “In over 10 years as a broker, I can count the JBSPs I’ve written on one hand. Metro Bank goes up to the age of 80, but terms are tied to the oldest applicant. If a parent is 55, a compressed 25-year term skyrockets monthly payments, crushing the child’s affordability.
“Factoring in a parent’s current mortgage, lifestyle and commitments against a shorter term means the maths rarely works.
“It’s brilliant PR for Metro Bank, and it will fit a very specific, high-earning niche where a parent is young and wealthy. But for the average first-time buyer, the age and term bottleneck will keep this product firmly on the shelf.”
