Family by name and family by nature

This article was created in partnership with Family Building Society.

Family Building Society has built a reputation of supporting borrowers at all stages of their home ownership journey. Consistently adapting its offerings to cater to the evolving needs of modern families, it comes down to “family building by name and family building by nature,” said Darren Deacon (pictured top, left), head of intermediary sales.

As an early leader in the space, Family Building Society’s expertise in intergenerational lending is even more of a differentiator in a society where people’s family situations are increasingly complex. Whether it’s a major life event that leaves someone with a mortgage and reduced income to support it, or a first-time buyer who finally saves a deposit amidst rising cost-of-living pressures but faces the next hurdle of demonstrating they can afford the mortgage with higher interest and tougher stress tests, people need additional help — and the Joint Borrower Sole Proprietor (JBSP) product is one option to provide it.

“It almost acts as a pseudo-guarantor scheme where someone is brought onto the mortgage to assist with affordability, but they aren’t added to the title deeds — ownership is in the names of the occupying borrowers,” explained Stuart Heavens (pictured top, right), business development manager at Family Building Society. “It fits massively with our intergenerational lending theme.”

Who does the JBSP help?

While typically aimed at first-time buyers, it’s also available for next-time buyers and remortgages as well, which underpins Family Building Society’s mission to provide solutions across a spectrum of situations.

“You can be a second- or twenty-second-time buyer, it really doesn’t matter,” noted Deacon, adding that this product has become more mainstream since its launch five years ago.

“We’ve seen a lot of this type of borrowing and especially with the difficulty people face having incomes for their first property, JBSPs have got far more traction over the last few years,” he said. “We recently expanded to cast a wider net over the family tree rather than just parents. Grandparents, aunties, uncles and even siblings can now support a JBSP arrangement.”

If a couple separates and one of them comes off the mortgage and is bought out of the property, and the remaining spouse doesn’t have sufficient income on their own, leveraging the JBSP option makes sense. This is also a scenario where Family Building Society’s unique approach to later life lending comes into play, because at this stage couples are often more established and their parents — who are often the ones assisting them — are also older. Well-known as later life specialists, Family Building Society can take the supporting borrower in their 70s, 80s, or even 90s.

“Lending up to 95 is something we shout about a lot,” Deacon said, noting the lender’s manual underwriters look at these borrowers past working age, considering things like pensions, pension pots, rental income and investments.

“We’ve got the ability to take a more holistic view than perhaps your high street lenders would on a credit score basis.”

Another developing situation is adult children supporting parents, where the reverse-JBSP can assist. Whether a grey divorce, a spouse that passed away, or reaching retirement and seeing a drop in income, “it’s no longer just the Bank of Mum and Dad helping out,” Heavens noted.

“There are a growing number of reasons that people later in life might need that help,” he said. “We cater to that situation as well and given that someone can be 95 at the end of the mortgage term, the older parents can have that mortgage for as long as they need in theory.”

Encouraging brokers to pick up the phone

The main message Heavens wants to convey is it’s not a one-size-fits-all product. He recalled multiple unique cases where the JBSP product was able to help, including someone in their 20s who owned a small percentage of the family business but would receive more shareholding over time, so their father guaranteed the mortgage for them.

“Situations like that don’t fit a specific tick box and if you go to a lender that only thinks within those boxes, you’ll struggle to get it agreed,” Heavens elaborated. “But this one went over to our underwriters, I gave them the details, and they were happy with the explanation. It’s an example of how there’s a wide variety of clients we can help with it.”

Brokers are encouraged to pick up the phone, connect with a BDM, and start running through their specific client scenario. With every postcode covered in England and Wales and armed with a dedicated BDM, they act as an effective sounding board and are skilled enough to identify potential solutions that work for the lender, work for the broker, and most importantly work for the end customer.

We often hear from brokers who explain a situation and ask what we think,” Deacon said. “The BDM can give ideas and suggest a strategy that works for everybody. They have close relationships with the underwriting team and can run through the case with them before it’s submitted to ensure the best possible chance of the application being approved.”

Intergenerational lending continues to grow

Above and beyond the life events that a person may experience through no fault of their own, there’s also been a shift in that people simply want to live their lives differently to how their parents and grandparents did. This sea change is one Family Building Society is aware of, and responding to, via ever-evolving solutions that meet changing societal needs.

It’s not the milestone it once was to have your mortgage paid off by 60, just in time to get your watch and retire after a 40-year career, Deacon said — people have other needs and wants, and demand for innovative solutions is only going to grow. Family Building Society is already seeing interest ramp up, fielding inquiries about the JBSP option almost hourly, and while nothing’s imminent, Deacon said the lender has “one or two ideas on the back burner” that will continue to deepen Family Building Society’s commitment to full-circle support for borrowers.

“People want more and more of these products, and we expect that to continue,” he said. “We’re always looking to shape our criteria, we’re always looking at new ways to assist, and we’re always looking at the intergenerational lending side of the business.”