The additions mean the platform can now provide even more accurate calculations for those who earning income through these channels or those looking to borrow using JBSP products.
Tanya Toumadj (pictured), chief executive at MBT, said its close work with lenders to inform its proposition had showed an emerging theme with CIS, umbrella companies and JBSP products.
She explained: “More lenders are offering specialist solutions in these areas and they calculate affordability in different ways, which means a significant divergence in the loan amount that could be achieved by the borrower.
“For example, when it comes to contractors earning their income through the CIS, most lenders treat these applicants as normal sole traders and base their affordability calculation on the net profit figure from each year’s tax returns. However, there are now 10 of the top 43 lenders that will take the gross weekly wage as if the applicant was employed, rather than the net profit figures.”
Toumadj said this could lead to a “big difference” in loan amount, and added CIS was “becoming a more competitive part of the market”.
She added: “We’re seeing similar competition in the umbrella companies and JBSP space and so it was clear that it was a natural development for the MBT platform to deliver bespoke calculations in these three areas.
“Continual development and improvement is a core element of our business and we never rest on our laurels when it comes to connecting customers to the right mortgage lender through brokers, improving the process and experience for everyone through technology.”
It is a two-year discounted rate priced at 3.1 per cent and comes with a £499 arrangement fee, and it can be used on residential properties in England and Wales.
The range currently includes five basic JBSP products and further two which are Buy for University products.
Existing offerings include two variable rate products, such as a two-year discount deal at 90 per cent LTV priced at 2.75 per cent, and a two-year discount rate product at 100 per cent deposit guarantee priced at 3.25 per cent.
It also has a three-year fixed rate product at 100 per cent deposit guarantee priced at 3.15 per cent.
The range allows older family members to help younger relatives get on the property ladder and allows up to four people on the mortgage application to help a borrower secure a home.
Affordability is assessed on account income and commitments of all named parties, and terms of up to 40 years are available.
All parties are responsible for mortgage payments and there is no requirement for the proprietor to take on the mortgage alone until family members are ready and able to make the switch.
Ashley Pearson (pictured), national business development manager at the mutual, said it had launched an 85 per cent LTV option in November and had been pleased with the response.
He said: “Introducing a product up to 95 per cent LTV for standard JBSP means we’ll be able to help more people realise their home ownership ambitions. It also sits nicely alongside our 90 per cent JBSP and our 100 per cent deposit guarantee JBSP offerings.”
During the pandemic, brokers anecdotally reported an increase in divorce-related enquiries, especially after the first lockdown, as the pandemic meant couples were isolated together for long periods of time which placed pressure on relationships.
However, brokers have said that in the past few months divorce-related enquiries had also risen, whether that is to remortgage to buy out partners, mortgage to purchase another property, remortgage to cover case settlements, single parent mortgages or joint borrower sole proprietor (JBSP) mortgages where a family member supports someone who is getting divorced.
The most recent statistics from Family Court state that there were 26,301 divorce petitions made during April and June this year, up seven per cent from the same period last year. Around 30,645 decree absolutes granted in the same period an increase of 23 per cent compared to the same quarter in 2020.
Chris Sykes, associate director and mortgage consultant at Private Finance, said that in the past two months the firm had seen “huge increases” in such enquiries.
Sarah Tucker, managing director of The Mortgage Mum, added that since lockdown measures were lifted there had been a big rise in divorce-related mortgage enquiries, specifically single-parent mortgages. She noted that in August 80 per cent of its enquiries were around single-parent mortgages.
Jennie Delelis, mortgage and insurance adviser and financial planner at Evolution Financial Planning, also said she had seen an jump in such enquiries recently, pointing to pressure from the pandemic and financial pressure as possible catalysts.
Challenges around financial commitments
Sykes said the fact the transaction may be divorce-related would have much bearing on a lender’s decision making, but “all the factors need to fit”.
He explained: “If there are child or spousal maintenance agreements, or agreements to pay school fees then this all needs to be considered. If there is going to be a marital home in the background commitments like a mortgage around this property will need to be taken into account.”
He added that if the transaction was still affordable it would most likely be fine, but loan to value limits or lenders available on purchase may be impacted, especially if someone already has a property in the background that was the marital home.
David Hollingworth, associate director of communications for L&C Mortgages said the breakdown of a relationship would most likely have “financial implication for both parties”.
He said: “There can often be a desire to retain the family home so that upheaval for a family is reduced to a degree, but that may not always be possible. Buying out the other partner’s share can be difficult especially where the borrowing had been based on income that was unevenly distributed between the two.
“If the main earner is moving out, then to put the property into the remaining partner’s name would mean the mortgage lender will have to see enough income to continue to support and potentially increase the mortgage to enable the buyout.”
He added that maintenance payments would then be “critical for affordability purposes” and lenders had “varying approaches”.
Hollingworth also explained that previously, the only way for maintenance payments to be included into affordability was by court order, but said lenders now had a more “flexible approach” to evidence maintenance income.
This could be done via a solicitor’s letter or by showing a track record of payments. Typically three to six months’ track record may be required.
Hollingworth added that another “stumbling block” was the duration of maintenance payments.
He explained: “By their nature, they will be for the benefit of the children and if the maintenance payments will stop within a few years then a lender may struggle to factor those payments in as adequate support for affordability.
“There are also now more lenders that will accept 100 per cent of the maintenance income but some may still only accept a proportion, so that could affect lender choice too.”
Sykes added that Private Finance had previously suggested to clients that they can “bolster their affordability” and “add a lot of borrowing power” by opting for a lump sum for maintenance payments rather than monthly commitments.
Joint borrower sole proprietor popular for newly-divorced
Tucker said lenders were happy to support single parents and borrowers, but it all came down to affordability.
She explained that often clients relied on family members to support newly-divorced applications, and this could be done with a JBSP mortgage, which she said had become “hugely popular” in the last two years.
Tucker said: “It gives our clients the chance to start fresh and work towards borrowing on their own in the future. It becomes hugely important to newly divorced clients to break away financially from their ex-partner, and I get that.
“Our job is to make sure they do this when the time is right and knowing they can afford it. JBSP allows us to give more people this option and freedom.”
Broker and solicitor advice vital
Brokers agreed that it was important to seek advice from a solicitor and a broker early in the process who can help you navigate the process.
Sykes said: “Seek advice early on in the process is the ideal, we can make sure a client is fully informed of their options and it could affect the process of divorce itself.
This was echoed by Delelis who added that seeking the advice of a solicitor if mediation hasn’t worked would help settle on a plan agreeable to both parties regarding children and assets.
She said: “Unless, they have a clear idea of settlement and what that might look like after the divorce is final, it’s going to be difficult to plan. Lenders want facts, which are sometimes impossible to provide until we know what their financial circumstances will be like post-divorce, if not already financially independent. After that, normal affordability processes apply.”
Tucker added: “Our advice to those who are wondering what their options are after a breakup, is to speak to a broker you trust, someone you can speak openly with, and someone who is going to hold space for you to navigate this situation with empathy. Emotions are high, and you may not be thinking logically at first.”
The lender offers a product similar to a joint borrower, sole proprietor (JBSP) mortgage which allows family and friends of a homeowner to act as a guarantor and make optional monthly payments towards the mortgage.
It also offers a ‘DIY Help to Buy’ which allows other parties to contribute to the deposit on a property in return for equity which increases or decreases in line with the value.
Sold exclusively through adviser firms who are part of the Legal and General Mortgage Club, Generation Home recently joined the Twenty7Tec platform to widen its reach.
The likes of Mortgage Advice Bureau, Stonebridge Mortgage Solutions, JLM, Alexander Hall and The Right Mortgage are now able to advise on its products.
The lender hopes to widen the distribution of its range to the whole of the intermediary market by next year.
Rice said: “We have just under 4,000 advisers on our panel and during the course of next year we plan to roll out to the whole of broker market. We want whole market coverage by the end of next year. The support we’ve had from brokers to date has encouraged us to do that.”
Generation Home said its current business split was 60-40 with majority of products sold direct to customer, but hoped to raise its intermediary led business up to 80 per cent.
Broker assistance
Generation Home has worked closely with brokers during its inception and the subsequent distribution of its products through MAB with the help of Kevin Bray, intermediary mortgage manager and Michael Aldridge, vice president of sales and partnerships. Aldridge was former innovation director at London and Country.
It was following conversations with brokers that the lender decided to tweak its products as well as add remortgage and capital raising options.
Rice said the broker feedback was integral to its business as the issue of lenders entering and leaving the market after “doing too much too soon” was raised repeatedly by intermediaries.
Speaking at the Mortgage Solutions British Mortgage and Protection Senate in September, Greg Cunnington, director of lender relationships and new homes at Alexander Hall, lauded the Generation Home’s affordability structure and said mainstream lenders should consider following suit.
Replacing schemes
Rice said Generation Home’s proposition could be deemed a replacement to existing schemes such as Help to Buy or shared ownership.
“The product we provide gives a secure and efficient way for families to co-invest into a property with their loved ones. It offers an alternative where a customer might have previously used or relied on Help to Buy.”
He said the option for those who contribute to the deposit to see their equity change depending on the property value was an added incentive “because the control remains in the hands of the customers.”
Generation Home claims its rates and fees are competitive. In its brochure which has been distributed to brokers, a 90 per cent loan to value (LTV) product which is fixed for two years has a rate of 3.19 per cent.
Future growth
Generation Home has raised £30m in equity funding from investors so far including backing from Natwest, which is one of its funding partners.
It also has a referral arrangement with Barratt Homes where potential customers are informed of Generation Home products when they enquire about purchasing a home.
Rice said the lender was satisfied with the service it had been giving to brokers and clients as it put it in a position to “scale up aggressively”.
He added: “We want to become a top 20 lender in the UK by next year.”
Generation Home was launched by husband and wife, Will Rice and Sophia Guy-White, in 2019 and was given regulatory approval to provide mortgages in September last year.
The offering is similar to a joint borrower sole proprietor (JBSP) mortgage in that it allows multiple parties to be named on a mortgage.
Where it differs is each party can choose to make payments or stop making payments when they choose. People can also be removed from the mortgage before the end of the term.
People on the mortgage can also earn equity in the property being lent on depending on any mortgage repayments they make.
The lender launched exclusively to Legal and General Mortgage Club earlier this year.
Rice said: “Independent advice is incredibly important to first-time buyers. As Generation Home takes its first steps towards opening up fully to intermediaries, working with Twenty7Tec will mean that more intermediaries can find, access and obtain a Generation Home mortgage for their customers.
“We know from working with intermediaries that Twenty7Tec is an invaluable tool for them to source products and therefore serve their customers better.”
Nathan Reilly, director of lender relationships at Twenty7Tec, added: “Based on data available through our Insight module, joint borrower sole proprietor was the most searched piece of criteria during September.
“This clearly underlines the challenge affordability still presents for many first-time buyers and the market as a whole, so it’s encouraging to see Generation Home tackling this issue head on and working with intermediaries to help more customers take their first step onto the property ladder.”
Prime borrowers are subject to the mutual’s standard credit criteria which allows minimal credit issues, with none in the last year.
Rate cuts have been made to the three-year discount product, which is 2.05 per cent lower than the mutual’s standard variable rate (SVR). This has been reduced from 3.29 per cent to 2.99 per cent.
The three-year fixed product has also been cut from 3.29 per cent to 2.99 per cent.
JSBP mortgages
Its JBSP range is now available up to 90 per cent LTV, previously 80 per cent LTV. The mutual said this was in response to feedback from both customers and brokers.
Tim Vigeon (pictured), head of lending at Buckinghamshire Building Society, said: “We pride ourselves on supporting people to own a home of their own and we are determined to do whatever we can to help first-time buyers join the property ladder. These significant changes to our product offering provides people with better value and more flexibility.
“This, coupled with our human approach to underwriting, will ensure we are able to consider applications on a case by case basis, with the aim of a positive outcome. We work closely with our broker network and feedback has allowed us to evaluate and continuously improve the products we offer.”
The society lent £483m in H1, up from £357m of loans made during the lockdown-hit six months in the first half last year.
The Newcastle enjoyed “a stable source of funding for mortgage lending,” this year, it said, with the savings market continuing to grow, on top of last year’s uplift, owing to lower spending during lockdowns.
The “strong mortgage market” had been “fuelled by a combination of government intervention and a shift in the needs of homeowners,” it added.
Growth in mortgage lending included adding 2,300 new customers, while “maintaining a sensible lending approach,” the lender said.
It specifically highlighted initiatives for first-time buyers, including its roles in Deposit Unlock and First Homes, as well as its 95 per cent, Help to Buy and Joint Mortgage Sole Proprietor offers.
Operating profit before impairments and provisions was £13m, up from £7.3m in H1 2020.
Newcastle brokers
Advice subsidiary Newcastle Financial Advisers “delivered a strong performance,” exceeding planned targets on growth of its customer base, level of funds invested, funds under management, and customer service, the Newcastle said.
The society moved out of its Newcastle city centre head office in early 2021, and is investing in “a substantial programme of transformation”, to provide a future-friendly hybrid working environment at its Cobalt Park, North Tyneside, site.
Andrew Haigh, chief executive at Newcastle Building Society (pictured), said: “We’ve continued our focus on helping communities recover from the impacts of the pandemic, and driven innovations in home ownership to help borrowers onto the property ladder, particularly those with lower deposits.”
The lender also made two new board appointments in H1, following departure of chairman Phil Moorhouse after almost a decade.
James Ramsbotham, CBE DL, was appointed as chairman. Ramsbotham was formerly chief executive at the North East of England Chamber of Commerce, and before that served for 14 years with Barclays, and was chair of Darlington Building Society.
Michelle Faull was appointed as a non-executive director and to the audit and group risk committees. Faull is a former chief financial officer at Coventry Building Society and risk director at Nationwide.
Questions most commonly focused on cladding, joint borrower sole proprietor products and expat borrowing.
Primis’s product desk answered 2,123 queries in total in July, compared to a monthly average of 2,083 last year.
The cladding issue drew questions trying to clear up confusion about criteria for EWS1 forms. The joint borrower sole proprietor queries reflected growing numbers of parents looking to help offspring get on the property ladder.
Finally, expat questions related to concerns that lenders may stop offering products to these borrowers owing to Brexit and this would preclude those clients from switching deals.
Vikki Jefferies, proposition director at Primis (pictured), said: “These figures demonstrate the success of our product desk, with the increase on July last year especially interesting given the high levels of market uncertainty at that time. Obviously we’re very pleased brokers have continued finding value in our support.
“There are still challenges in the market and we will continue to invest in our broker relationships and provide support through our product desk and virtual experts webpage,” Jefferies added.
The broker, which launched in June, offers a whole-of-market service with a focus on mortgages designed to let first-time buyers (FTBs) lean on friends or family to support a purchase.
The firm is also an appointed representative of Primis Mortgage Network.
The funding was provided by Aviva, and venture fund Fair by Design, which is backed by Ascension Ventures – whose own backers include Nationwide, Big Society Capital and Joseph Rowntree.
Richard Dana, chief executive and co-founder at Tembo Money (pictured), said the new broking firm was “focused on finding ethical, safe and flexible ways to rebalance the property wealth gap between generations.”
The funds raised would be used to build an online technology platform with an initial fact find that takes in data about potential support from family or friends. A plan is then created to help users reach their goal.
“If they can afford a mainstream product the plan generated will show that. If they’re a bit short, there will be other options,” Dana said.
He added that while 15 to 20 lenders offered joint borrower sole proprietor (JBSP) or retirement interest only (RIO) products with the aim to aid affordability for FTBs, they tended to be smaller operations with limited marketing budgets.
“We want to explain these products and raise awareness,” Dana said.
The funds will be used to develop the firm’s technology and to grow Tembo Money’s team.
“We’re incredibly happy that major players in finance and technology like Aviva and Fair by Design are joining us on our journey,” Dana said.
Dana’s professional history includes a spell in restructuring at EY, a role as co-founder of startup accelerator Founders Factory, and time running boutique travel firm Doris & Dicky.
Tembo Money’s offering includes the Deposit Boost plan, where family or friends can unlock value from their own property by way of a RIO, to top up a first-time buyer’s deposit or create one from scratch.
Additionally, its Income Boost proposition, based around JBSP products, lets a family member allocate some of their own income to the buyer’s mortgage application to increase borrowing potential.
