The last couple of years have been difficult for everyone and, as we now move forward out of the pandemic, further challenges have emerged for the self-employed who have taken government assistance for their businesses and now need to apply for a mortgage.
This has added a new layer of complication to their mortgage application with lenders taking different approaches from declining the application to requiring onerous paperwork to confirm that trading is recovering to pre-pandemic levels. This adds time and costs to the application process.
Case Study: How Joint Borrower Sole Proprietor (JBSP) can help self-employed applicants who have been impacted by Covid.
Note: this case study is representative of a real life case, however all details have been changed to protect the identity of our member.
Billy is a 25 year old self-employed PE teacher. During Covid, he turned to the government grant scheme as he could not teach as often during that time. He has now returned to work and his income is increasing. Billy’s Dad, Marcus, has been self-employed for some time and his earnings were not affected by the pandemic and remained stable.
Billy has saved £60,000 for a deposit and would now like to buy his first home worth £300,000. After receiving independent legal advice, Billy’s Dad was happy to help and support his son with the affordability by being added to the mortgage. The 40 year term is based on Billy’s age as we expect to release Marcus from the mortgage obligations within 5 years when Billy’s income fully recovers, which can be demonstrated through accounts or tax returns. Marcus incurs no stamp duty liability as he is not an owner of the property.
By using the Buckinghamshire Building Society Joint Borrower Sole Proprietor option, the application was able to proceed quickly to completion with a minimum of fuss around proof of income for Billy.
Highlights of Buckinghamshire Building Societies JBSP product:
- Max LTV: 90% and up to 40 year term
- Based on applicants age
- Affordability Calculator available
- Manual underwriting, where cases are assessed individually
- ERC’s and T&C’s apply.
- 2 years income evidence required for self-employed applicants
- Applicant must be able to demonstrate how they can support the mortgage in their own right within a 5 year period
- Income must cover both households expenses
- Earned income can be considered up to age 75 based on job plausibility and clients intention to work to age 75
To find out more about this and our other mortgage products, visit www.bucksbs.co.uk/intermediaries
