Charlotte Grimshaw, Head of Intermediaries
Joint Borrower Sole Proprietor with Later Life lending?
Hear us out.
It’s been 12 months since we launched JBSP, and a few weeks since we bumped the LTV up to 90%. It’s proved so popular that JBSP features in 9% of our applications so far this financial year.
What’s stood out since we launched? Applicant age. Since launch, one trend has been impossible to ignore: later life borrowers are at the heart of JBSP – either as the supporting borrower or the proprietor. Our oldest applicant so far? 93.
Intergenerational lending is leading the way, and we’re finding it is parent-child relationships dominating JBSP applications.
It’s not just affordability that’s driving applications. JBSP can also offer tax planning advantages – from second home stamp duty surcharges to helping first-time buyers retain their discount.
Some of the cases we’re seeing are classic Bank of Mum-and-Dad (BOMAD) scenarios. JBSP naturally lends itself to later life lending, whether it’s parents or grandparents helping first time buyers, or adult children navigating divorce, older applicants underpin these examples.
With longer mortgage terms improving affordability, we’re helping more applicants where there is at least one applicant either already in retirement, or who will be taking the mortgage into retirement.
BOMAD Case Study – Later Life Expat Resi JBSP!
Dad is an expat in Qatar with a good job in the energy sector. He wanted to help his daughter get on the property ladder back home in Wales. Daughter had income but it wasn’t sufficient for affordability. Dad was happy to support, using two currencies (Qatari Riyal income, and Sterling private pension). Dad is 62 and we were able to arrange a 25-year mortgage term, as his earned income and future expected retirement income, when combined with his daughter’s earned income met affordability.
But here’s the twist…
While BOMAD remains a firm favourite, we’re now seeing the Bank of Son-and-Daughter (BOSAD) emerge as a new trend. Adult children are stepping in to support their parents – flipping the traditional model on its head.
BOSAD Case Study – Later Life Sale and Downsize JBSP!
We’ve had a case where a 25- year-old son wanted to help his divorcing mum (the proprietor) stay in her home. He lives in the property too. Mum is 60 and we need the son’s income on the mortgage; mum’s long-term plan is to sell and downsize. We took mum’s earned income to age 75 and son’s income, with the mortgage on an interest only basis over a 14-year term. Calculating affordability on an interest only basis helped us to lend the amount needed.
Later life lending is no longer confined to traditional products like RIOs and equity release. Increasingly, we’re seeing older borrowers take out standard mortgages – either already retired or planning to take their mortgage into retirement.
And it’s not just in residential lending. Later life lending is showing up across the board – from expat and buy-to-let (including holiday lets) to self build.
In short:
Later life lending is evolving and with more families supporting each other, it’s spilling over into ‘mainstream’ lending. And JBSP is right at the centre of that shift.
Charlotte Grimshaw, Head of Intermediaries
