At Diamond Property Finance, we’re dedicated to helping first-time buyers overcome the barriers to home ownership. When a young client, eager to leave the nest and buy their first home, reached out to us, they faced a common challenge: their savings and income didn’t match what traditional mortgages required.
Case Profile:
Our client, living with their parents, had saved a 9% deposit for their dream home priced just under £200,000. However, they encountered a significant hurdle: their income was below the threshold that lenders typically look for, which is about 4 to 4.5 times a borrower’s annual salary. This financial gap put conventional mortgage options out of reach.
Solution:
To navigate this challenge, we looked into several mortgage options and identified a Joint Borrower Sole Proprietor (JBSP) mortgage as the ideal solution. This type of mortgage allowed us to utilise the income of a co-borrower—our client’s father in this case—without making him a co-owner of the property. This arrangement helped meet the lender’s income multiple criteria and maximised the potential loan amount available.
We worked closely with the lender to explain the unique financial setup and the reliability of using the father’s stable income for loan assessment. After thorough discussions, we secured a 91% loan-to-value mortgage, effectively using the client’s 9% deposit. The mortgage was structured over a 40-year term, focusing on the client’s younger age to ensure lower and more manageable monthly payments. This strategic decision kept the monthly costs down and was fixed at an interest rate of under 5% for the next five years.
This thoughtful financial structuring allowed our client to leap over the affordability barrier and onto the property ladder. Now happily settled in their new home, our client appreciates the personalised approach and financial creativity that turned their home-buying dream into reality.
