26 December 2023

Joint borrower sole proprieter to income booster - What's in a name?

By Derek Adams, National Accounts Lead, Skipton Building Society

I’m sure that there are some other industries that must push as close, but the mortgage industry must be Premier League when it comes to the use of jargon. I’m quite happy to admit that, over the years, I may have had the odd bit of feedback as to my over-use of jargon (there, I’ve said it).

One of the key aims of the new Consumer Duty legislation was to raise standards for consumers and particularly around providing them with communication they understand. As part of our full review for getting ready for Consumer Duty as a lender, we recognised there was more we could do to make our communications clearer and use plain English where we can [insert Scottish National Account Lead joke here].

I think we’re all aware that getting your head round mortgage information and terms & conditions is really difficult for potential borrowers – which is why more and more people are turning to brokers to guide them through their options – but it must be particularly difficult for anyone who is doing things for the first time.

The Impact of Jargon on First Time Buyers (FTBs)

At Skipton, we commissioned some research of 1,000 aspiring FTBs, surveying them about the jargon associated with the home buying journey. The research looks at both general terms and product names and how the complexity of these make the process confusing, leading to some FTBs not understanding the options available to them.

The standout statistics from our research were:

  • 41% are confused by the homebuying process, including understanding mortgage terms
  • 60% of them are worried their lack of understanding is slowing down the process
  • 52% of them are worried on missing out on a better deal because they don’t understand what is available to them
  • 35% of them feel that product names make them difficult to understand and 39% would like to see them renamed

From Joint Borrower Sole Proprietor to Income Booster

One of the first products we have decided to rename is our Joint Borrower Sole Proprietor scheme. Over the years I’ve heard various explanations of the phrase and even ‘that thing that allows mum and dad to help a first time buyer with income’. In reality, it doesn’t really explain the benefit it can provide to a potential borrower and I’m sure they have no idea what it is when they look at the name for the first time.

With affordability being a major challenge for borrowers in the current climate, being able to increase your income to afford a property may be an ideal solution for some. In my opinion, ‘Income Booster’ gives a clearer description of what this particular product can do for a borrower and allow them to understand how it could help them get on the property ladder.

Income Booster!

Here’s a reminder of some of the benefits with our Income Booster Scheme:

  • We can accept up to 4 applicants and use all 4 incomes (we don’t need there to be a family relationship).
  • We can utilise additional regular income such as bonus, overtime and commission.
  • Where we don’t need to use the eldest applicant’s income for affordability, we can ignore their age for the mortgage term.
  • Max age of 80 may be considered on the oldest supporting borrower when considering the maximum term, where the income is being used for affordability.

We require that all supporting borrowers get independent legal advice before applying, as all borrowers will share the legal responsibility for paying the mortgage.

As a lender we’re trying to play our part in demystifying the home buying journey and the language used. This may just be a change of name, but hopefully this allows you as a broker to have better conversations with your borrowers starting out on their mortgage journey.

These views are Derek’s own.

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