Joint Borrower / Sole Proprietor
With first-time buyers struggling to get onto the property ladder, many are teaming up with their partners, friends and family to combine two deposits and incomes.
This type of mortgage is aimed at bridging the gap between salaries and property prices. With a 3% stamp duty surcharge recently introduced on second homes Joint Borrower Sole Proprietor mortgages applications have started to become popular.
What is a Joint Borrower Sole Proprietor mortgage?
It’s a mortgage that enables an applicant with a lower salary to get support from someone, usually a family member (depending on lender), to apply for a mortgage. The supporting applicant would effectively be a guarantor to help increase the amount of money that an applicant can borrow. A potential lender would consider both the applicants and the supporting persons income, so the potential to borrow more money increases significantly. Any borrowing amount would need to be set based on what the applicant can realistically afford on their own, taking in to account potential future interest rises.
This arrangement could mean that the supported applicant will potentially be able to get a foot on the property ladder when they may not have been previously able to.
What else needs to be considered?
The applicant that is supporting the purchase will not be named on the deeds to the property which means that, as a non-legal owner, they won’t be able to be entitled to any gain in the property – be that via rental yield or property value.
If, as can be the case, the relationship between the two parties breaks down, it could be difficult for the non-legal owner to have their name removed from the mortgage.
With such a bespoke mortgage that is only dealt with by certain lenders, speaking to an independent mortgage adviser is imperative for this sort of application.
Your home may be repossessed if you do not keep up repayments on your mortgage
