Getting your first step on the property ladder is never easy - especially if you’re buying somewhere on your own.
First-time buyer Madeleine, 28, had moved back in with her parents to save up £30,000 for a deposit on her dream home.
But despite having a good deposit in the bank, she still had trouble securing a mortgage. Lenders will typically let you borrow around four times your salary.
This means if you’re buying on your own, you’ll be able to borrow a lot less than someone buying in a couple where both your salaries are taken into account.
You normally need to have a larger salary when buying solo, to compensate for not being able to borrow more.
As an assistant psychologist working for the NHS on a £26,365 salary, Madeleine was being priced out of the property market in south east London.
The young professional also didn’t want to start renting or live in a house share, as she has a pet dog and would’ve found it harder to save up.
To help her get on the ladder, Madeleine used an income boost mortgage to secure her first home.
Also known as a Joint Borrower Sole Proprietor (JBSP), this is a way of adding the income of a family member to your mortgage to boost how much you can borrow.
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They will have no ownership over the property, but will need to help with repayments if required.
Madeline was able to use the income from her father David to boost her affordability from £115,000 to £319,000.
This meant she was eligible for a £255,000 mortgage with Tembo, and could buy her two-bed flat worth £285,000 in Croydon.
“I would have been living at home for at least another five years if I wasn’t able to secure a mortgage,” she said.
“I didn’t want to rent, as it wasn’t right for me, and I would have lost the deposit I worked so hard to save for over the years.”
But what are the pros and cons of an income boost mortgage and how do they work? We explain…
Income boost mortgages explained
An income boost mortgage is where the lender includes someone else's income - for example, a family member or close friend - when calculating your mortgage affordability.
It effectively means buyers can qualify for a larger mortgage - which could be good for single occupants who don't have a large deposit.
Unlike a guarantor mortgage, it doesn’t require parents to use their savings or property as a guarantee.
It also allows the buyer to get first-time buyer relief on stamp duty, so they don’t have to pay the surcharge they’d need to pay if they were buying with homeowning parents.
But one of the biggest downfalls to an income boost mortgage is that everyone is jointly liable for paying the mortgage.
"If any payments are missed, it will affect everyone’s credit rating," said Sarah Coles, senior personal finance analyst at Hargreaves Lansdown.
"Those who are helping, but not named on the deeds, also need to understand they will receive nothing in return.
"Anyone choosing to help a family member needs to understand what they’re getting into."
There are some restrictions that may make it more difficult as well.
For example, some lenders have an upper age limit, so if parents will be in their 70s or 80s by the end of the mortgage term, they may not be able to help.
"If you take this option, it’s a good idea to agree in advance when it will come to an end, and the property owner will start paying the mortgage on their own" said Ms Coles.
"Otherwise, you may have very different ideas about how long this arrangement will continue for."
Finally, there are also only a limited number of providers offering these mortgages, so they’re likely to be more expensive.
You should also be aware that borrowing a larger chunk of money does mean your repayments will be large each month, so always make sure you afford your mortgage.
