Abigail Pyatt is a mortgage adviser at Mortgage Advice Bureau South West and is based within an estate agent office in Plymouth. As a result, she does a lot of purchase business, including a large number of first-time buyer cases.
Pyatt previously worked as a mortgage adviser at NatWest before becoming a broker 18 months ago.
She said that first-time buyers in and around Plymouth struggle with affordability due to high house prices, and are increasingly turning to their parents for help onto the ladder.
In one case, the First Start deal from Post Office Mortgages, provided by Bank of Ireland UK, proved to be the ideal solution for a father and daughter, as she explains:
The right location
“My client, Lily, is in her mid-20s and really wanted to buy a two-bed terraced property around the corner from her parents and close to her place of work,” says Pyatt.
“Unfortunately, the home she wanted in that location was just over £200,000 and her income didn’t stretch. It just wasn’t really viable. With her budget she would be looking at a small apartment in a different part of town, which would be too far away from her family.
“It was frustrating because Lily knows her income is likely to rise substantially in the next few years as she is currently working on an apprentice scheme in a local plumbing firm.
“Lily and her father, Ian, came to see me to ask about guarantor mortgages and what was available. Luckily, the week before, my BDM from the Post Office had been in to tell me all about their First Start mortgage. It was a new product at the time and I was able to give the family details about what is was, how it differed from guarantor deals and how it could work for them.
“They immediately saw that this could be the right mortgage for them.”
How it works
The First Start mortgage allows a parent’s or close relative’s income to be used alongside the buyer’s for affordability purposes.
But importantly, while the parent shares the mortgage, they can choose not to be on the title deeds, and the buyer fully owns the house.
If they are a first-time buyer, like Lily, that means no Stamp Duty is payable (up to £300,000).
“Lily and Ian’s incomes together meant that Lily could afford the property she wanted, and as a first-time buyer she didn’t have to pay Stamp Duty, because Ian wasn’t on the deeds,” explains Pyatt.
“Of course, it was essential that Ian took legal advice to be clear on his responsibilities as a joint mortgage holder.
“The process was straightforward and underwritten like any other mortgage. Both of their incomes and commitments were taken into account, and the processing was done as normal, with the additional legals for Ian.
“Now Lily is in the property and happy to be on the ladder and so close to her parents. And she knows that, as her income increases, she will be able to remortgage to a deal without her father’s support, and Ian will come off the mortgage. First Start gives her a temporary leg up onto the ladder, meaning she doesn’t have to wait longer and risk house prices rising further out of her reach.
“Obviously not everybody has parents in a position to go onto a mortgage with their children, but it offers another option to those who can, and is a different approach to offering a gifted deposit for example.”