The West Brom has expanded its product range to include a new type of assisted mortgage, where additional income from a nominated sponsor supports the repayment costs.
Unlike a more commonplace joint mortgage, the assisted mortgage only has the main applicant registered as the owner of the property.
It is designed for borrowers who have the funds in place to put down a suitable deposit for a home, but wouldn’t yet be able to afford their monthly repayments without help.
Rates for the West Brom’s assisted mortgage start from 2.34% for a two-year fix at a maximum loan to value (LTV) ratio of 90%. A fee of £499 is payable upon completion.
Borrowers who do not wish to pay a completion fee can opt for a two-year fixed rate of 2.69% (up to 90% LTV) and will also benefit from a cashback payment of £500.
The maximum loan size is £500,000 and early repayment charges apply. There are remortgage options available for existing borrowers with the same rates and product features.
David Taylor, the West Brom’s head of products, said: “We are looking to provide a solution for people whose current income is limiting their ability to proceed with the purchase of the property they want.
“Rather than delay their plans, we can consider allowing them to seek assistance from someone they have a close relationship with, such as a family member, who becomes their sponsor. By combining incomes, the applicant becomes better positioned to qualify for a loan.
“Since they are joint borrowers, both parties are liable for the repayments, but only the applicant takes actual ownership of the property. Over time and as their personal earnings increase, we would expect the applicant to eventually assume full responsibility for the mortgage and the sponsor to step away.”
Although of use to a buyer looking to purchase their first home, the assisted mortgage is not exclusively for this market sector.
Taylor said: “There are other situations where this type of product could be beneficial, for example a change in a borrower’s personal circumstances which temporarily affects their affordability.
“As a building society, we are here to help customers fulfil their ambitions of home ownership and sometimes that will require a more flexible and innovative approach, while still ensuring we continue to lend responsibly.”
The Society states that both buyers and sponsors will need to meet its standard lending criteria and it recommends seeking independent legal and tax advice so that all parties are aware of their rights and responsibilities under the mortgage agreement.