Joint Borrower / Sole Proprietor
Prospect Mortgage Services provide independent, sound and honest advice for your mortgage and protection needs.
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 utilise multiple incomes. This type of mortgage is aimed at bridging the gap between earnings and property prices. With a 5% stamp duty surcharge applicable on second homes Joint Borrower / Sole Proprietor mortgage 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 boost the amount of money that an applicant can borrow. A potential lender would consider the applicant’s and the supporting person’s income, so the potential to borrow more money increases significantly. Any borrowing amount would need to be established based on what the applicant can realistically afford on their own, taking in to account potential future interest rises.
This type of arrangement is already helping thousands of applicants to get a foot on the property ladder when they would likely struggle to do so on their own.
What else needs to be considered?
A Joint Borrower will be required to seek independent legal advice as a condition of the mortgage. Conditions can vary by lender, however in principle the Joint Borrower (supporting the main applicant) will not be named on the deeds to the property. This means that the additional stamp duty charge may not be payable, even though the Joint Borrower may be an existing property owner.
Whilst the arrangement can be a game-changer in the right circumstances it won’t be for everyone. Speaking to your independent Prospect mortgage adviser will be imperative for this sort of application.