Metro Bank has launched a new mortgage for joint borrowers and sole traders to help first-time buyers get onto the property ladder.
The mortgage allows customers to borrow more than 95% and up to 100% of the value of the property.
To do this, the customer needs an immediate family member, such as a parent, to act as a co-borrower in the event of a missed payment or change in financial circumstances, hence the nickname “lay-on loans.”
Lending will be subject to Metro Bank’s affordability checks and borrowers will have to meet stricter eligibility requirements.
Charles Morley, mortgage distribution director at Metro Bank, said: “For many first-time buyers in today’s housing market, getting onto the property ladder can seem impossible, and family members often want to do whatever they can to help.
“By acting as a joint borrower, the immediate family can provide that support without diluting ownership of the property or being asked to make a down payment.”
During the application process through both the broker and direct channels, borrowers receive specialized mortgage advice before applying for the product.
Both the borrower and the joint borrower are considered liable for the repayments, but the borrower retains all rights to the property, with the joint borrower acting as a safety net to cover the costs of the repayments, if necessary.
Both the borrower and the joint borrower will be subject to stricter affordability checks to ensure the product is suitable for all parties.
The product has a term of five years, with a minimum term of five years and a maximum term of 35 years. There are no product or appraisal fees involved.
Joint borrowers are limited to immediate family members only and must have their own source of income, apart from pension or other benefits.
Metro Bank also has a one-person product for joint borrowers with an LTV of up to 95%.
At this point, the criteria for joint borrowers is expanded to include both non-relatives and family members, including for example grandparents, godparents or close family friends.
Metrobank last week made several recruitments within its specialized mortgage activities.