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TSLE2020: JBSP can be viable alternative for ‘very frustrating’ RIO rules

  • 10/02/2020
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TSLE2020: JBSP can be viable alternative for ‘very frustrating’ RIO rules
Affordability restrictions on Retirement Interest-Only (RIO) mortgages by the regulator are ‘very frustrating’ but joint borrower sole proprietor (JBSP) can be a viable alternative, a lender has said.


Speaking on the panel session at The Specialist Lending Event, Cammy Amaira, director of sales and marketing at Tipton and Coseley Building Society, noted that lenders were aware of many RIO cases being turned down on the basis of affordability.

A broker at the Sandown Park event raised concerns that the high level of declines for RIOs was pushing borrowers towards equity release, which they do not want.

Amaira (pictured) said there was little lenders could do as they had to follow the Financial Conduct Authority’s (FCA) rules.

“Unfortunately our hands are tied, the regulator insists that the person with the lowest income must be able to afford the mortgage from day one,” he said.

“A lot of people have 50 per cent spouses’ pension and that’s great, but so many don’t and unfortunately when we look at the lowest income should the highest earner pass away, it’s not affordable.

“So unfortunately we have to decline so many purely on that basis and it’s very frustrating.”

However, he did suggest there was a possible alternative.

“Joint borrower sole proprietor might be able to help some of those cases if the kids are in a position to help their parents,” Amaira continued.

“Although the older borrowers might not fit in a RIO, if their children are able to help then we could do a reverse JBSP, that’s something we would consider.”


The Specialist Lending Event 2020 continues this week with free registration still available for the events at York and Liverpool.


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