This is an innovative product which may prove useful to first-time buyers looking to get on the first rung of the property ladder.
The structure of the product is that, provided the property is suitable, one room can be let to a lodger and £4,250 can be added to the applicant’s basic income, enabling a higher level of borrowing than might otherwise be possible. The extra rental income can also help pay the mortgage and household bills.
There is no other comparable product on the market, although in reality the letting of one or more rooms in a property is commonplace, either with or without the lender’s knowledge.
Some borrowers do not realise their mortgage deed prevents them, in theory, from letting a room without the lender’s consent and those who do know the rules keep quiet, pay the mortgage and the lender is none the wiser.
But there may be those who would prefer to be up-front with the lender about taking in a lodger. This scheme allows them to keep everything out in the open.
The product launch produced much interested and positive public relations and while it remains ‘one of a kind’ it is likely to write some business too.