A non-occupying applicant can be named on the mortgage, and be used to assist with affordability, but not be a legal owner of the property (referred to as Joint borrower/sole proprietor) subject to the following:
• max LTV 80%
• The non-occupying applicant(s) being a parent(s)/grandparents(s) of one of the occupying applicants.
• The number of non-occupying applicants not to exceed 2. With a maximum of 4 applicants on the mortgage in total
• 100% of the income, allowed under policy, from all applicants can be used for affordability purposes
• The affordability assessment to be compliant with MCOB and cover expenditure for both the applicants and the parent(s)/grandparent(s) households.
• A recommendation to be included in the mortgage offer that the parties to the mortgage discuss/agree their personal future ‘exit’ plans separately to the legal requirements/obligations under the mortgage.
• The Society receiving independent legal advice that:
The applicant understands that they will have no beneficial interest in the property
Acknowledges that they are joint and severally liable for payments on the full mortgage if the Sole Proprietor is unable to make them at any point during the mortgage term
Is not a vulnerable individual, or has been coerced into agreeing to be a joint borrower
It has been highlighted that there could be a reduction in the value of their own estate by virtue of funding a property they won’t own and the potential for family disputes (siblings set against one another)
They have been recommended to take independent tax advice
Lending will be on the basis of specific ‘Family Assist’ products which have been appropriately risk priced by the Product Governance Committee.
The assistance cannot be used in conjunction with any other home ownership scheme such as shared ownership or help to buy
Note: Where a parent(s)/grandparent(s) requests to be named as joint legal owner this is permitted, with all above criteria points available to the parent(s)/grandparent(s), with the requirement for independent legal advice removed. In this instance it will be necessary for the Solicitors acting for the parent(s)/grandparent(s) to confirm that:
The parent(s)/grandparent(s) understand that they will be joint and severally liable for payments on the full mortgage even of the child is unable to make them at any point during the mortgage term.