Its product is aimed at assisting parents in getting their children onto the housing ladder without being on the title deeds and jointly owning the property.
This means that no stamp duty surcharge is payable by the parents and the child can take advantage of stamp duty being abolished for first-time buyers purchasing homes priced up to £300,000.
This is Vida’s version of the ‘Joint Borrower, Sole Proprietor’ proposition currently offered by high street lenders Metro Bank, Virgin and Barclays, and small building societies such as the Family Building Society and Hinckley & Rugby.
This new proposition has been developed to target those customers who are unable to afford a property on their own, or following a life event where an affordability boost from a parent to purchase or remortgage a property would be useful to help them get back on their feet.
Research from Legal & General has revealed that the Bank of Mum and Dad continues to be a top ten UK mortgage lender, setting to lend £5.7bn in 2018 to children buying property in the UK.
Vida’s Helping Hand allows parents to help their child by allowing them to be a joint party to the mortgage and have their income taken into account as part of the affordability assessment.
A JBSP can also provide an exit strategy when the child’s income increases and they can afford the loan in their own right.
Vida’s Helping Hand is available up to a maximum of 90% LTV for first-time buyers. It can be combined with gifted deposits, the self-employed and a maximum of four applicants buying together, across the wide range of Vida’s Plus rates and specialist lending criteria. Parents will be jointly and individually liable for the mortgage along with the occupiers in maintaining the repayments.
Louisa Sedgwick, director of sales – Mortgages at Vida Homeloans, said: “At a time when first-time buyers are facing significant affordability constraints and house prices continue to rise, we think that Vida’s Helping Hand mortgage will provide a new and interesting option for mortgage intermediaries who want to provide solutions to parents trying to help their children onto the housing ladder. It combines the advantages of a Joint Borrower Sole Proprietor mortgage with our specialist approach to customers who may not fit the criteria currently demanded by high street lenders.”
Craig Hall, new build manager at Legal & General Mortgage Club, said: “Our recent research shows that this is an important factor for the first-time and next time buyer market and it is refreshing to see new lenders like Vida supporting this part of the mortgage market with their Helping Hand product. This combined with all the other elements of Vida’s criteria makes this a great proposition for intermediaries, further highlighting the need for independent advice and the value of a broker.”
The JBSP Mortgage and Stamp Duty
In April 2016, a 3% stamp duty surcharge was introduced for people purchasing second homes and buy-to-let properties. This presented a significant challenge to parents wanting to help their child get on to the property ladder by jointly borrowing a mortgage and buying a property.
The main attraction of a JBSP mortgage is that parents are not named on the title deeds so won’t need to pay the stamp duty surcharge. Additionally, in November 2017, stamp duty was abolished for first-time buyers purchasing homes priced up to £300,000 or the first £300,000 of a £500,000 property in more expensive locations.