New Vida mortgage helps Bank of Mum and Dad avoid stamp duty surcharges

House-Keys-Mortgage-Estate-Agent-700.jpgSpecialist lender Vida Homeloans has launched its first Joint Borrower Sole Proprietor mortgage, aimed at parents helping their children buy a property.

These JBSP mortgages allows parents to provide financial assistance, but they are not joint owners of the property, and their name does not appear on the title deeds.

This means they do not have to pay the additional 3 per cent stamp duty surcharge that is levied on second properties. For first-time buyers purchasing a property for less than £300,000 this effectively enables them to buy without incurring any stamp duty charges.

Vida’s ‘Helping Hand’ mortgage will take the parents’ income into account when assessing affordability. Parents will be jointly and individually liable for the mortgage along with the occupiers when it comes to maintaining repayments.

This Helping Hand mortgage offers first-time buyers mortgages up to 90 per cent LTV. Rates start at 3.44 per cent, at 70 per cent LTV, and go up to 4.89 per cent for loans at 90 per cent LTV. 

The terms of the mortgage allow gifted deposits, and Vida Homeloans will also accept applications from the self-employed, those with impaired credit scores, as well as up to four applicants buying one property together.

Only a small number of lenders currently offer JBSP mortgages – including Metro Bank, Virgin, Barclays, Family Building Society and Hinkley & Rugby BS.

Vida Homeloans director of sales Louise Sedgwick says: “At a time when first-time buyers are facing significant affordability constraints and house prices continue to rise, this mortgage will provide a new option for mortgage intermediaries who want to provide solutions to parents trying to help their children onto the housing ladder.”

Sedgwick says the mortgage combines the advantages of a JBSP mortgage with Vida Homeloans underwriting approach for customers who may not fit the criteria demanded by high street lenders.

Legal & General Mortgage Club new build manager Craig Hall adds: “Our research shows this is an important factor for the first-time and next-time buyer market.”

Research by L&G shows that parents are expected to lend up to £5.7bn to children buying property in the UK in 2018.

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