New product boosts first-time buyers' borrowing capacity by combining incomes with family or friends
High street lender NatWest has introduced a new Family-Backed Mortgage, aimed at assisting first-time buyers by boosting their borrowing capacity through a joint income approach.
The product, formally known as a joint borrower sole proprietor (JBSP) mortgage, enables eligible customers to apply for a mortgage with the support of a family member or friend without sharing ownership of the property.
By allowing applicants to combine their income with that of a relative or friend, NatWest aims to help more people enter the housing market. Under existing mortgage terms, a first-time buyer earning £28,000 with a 10% deposit could borrow up to £124,450, giving a purchase budget of roughly £138,000.
With the Family-Backed Mortgage, if the applicant adds a family member or friend earning £45,000, the potential borrowing limit could rise to £246,000, increasing the property budget to approximately £273,000.
In a further move to support borrowers, NatWest has adjusted its affordability assessment criteria across all mortgage products. The change follows recent encouragement from the Financial Conduct Authority (FCA) for lenders to apply more flexibility within existing mortgage regulations, particularly regarding interest rate stress testing, to widen access to home loans.
NatWest said the update to its stress testing methodology will allow an average family to borrow up to £33,000 more, while maintaining safeguards against future rate increases.
“We are committed to providing more pathways to home ownership and helping first-time buyers to achieve their goals,” said Barry Connolly, managing director of homebuying at NatWest. “Today’s launch of the Family-Backed Mortgage boosts the borrowing power of prospective homeowners by enabling them to combine incomes with a family member or friend, while retaining independence to own a home in their own name.
“In addition, we also announce that we have revised our affordability rates for mortgage customers, boosting the borrowing potential of hundreds of thousands of potential homeowners, while continuing to ensure that they can afford their mortgage over the long term. We believe that this twin announcement can help instil hope among our customers that their dreams can be realised.”
NatWest also offers loans up to 95% loan-to-value (LTV) for eligible borrowers and permits deposit gifts from immediate family members to be treated as the buyer’s own contribution.
The Family-Backed Mortgage is not compatible with schemes such as Right to Buy or Shared Equity. Standard lending policies apply, including a maximum applicant age of 75 and a minimum income requirement of £20,000 gross per annum.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
