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Author: Elliott Culley - Director & Mortgage Adviser of Switch Mortgage Finance
A joint borrower sole proprietor mortgage is a way to increase the amount you can borrow by adding a friend or family member’s income to your mortgage application.
It is a great solution for first time buyers and allows parents to help support their children take their first step on the property ladder.
It can be also used by children looking to support their parents in later life by being added to the parents mortgage to support their borrowing needs.
What is a Joint Borrower Sole Proprietor Mortgage?
A joint borrower sole proprietor mortgage is where the home buyer can add either a family member or friend’s income onto their mortgage application. This specialist mortgage allows a family member or friend to help a buyer increase their affordability, without handing over any cash.
It’s a particularly good option for buyers who are still early on in their careers, so might be on lower salaries for the next few years, but expect their earnings to rise.
Only the buyer will own the property (the “sole proprietor”), but your loved one will be on the mortgage as a “joint borrower”, which means they will be liable to pay the mortgage if you cannot.
How Does a Joint Borrower Sole Proprietor Mortgage Work?
A joint borrower sole proprietor mortgage works in a similar fashion to a standard mortgage. All borrowers are assessed by the lender. Borrowers must meet the lender’s criteria, including age limits, income and creditworthiness.
The crucial difference with a JBSP mortgage is that only one of the borrowers (the proprietor) is named on the property’s ownership deeds. In most cases the person who will be living in the property.
All the mortgage holders are liable for repayments which means a missed payment could affect all parties credit profiles.
This type of mortgage means that parents or close family members can assist their loved ones in helping them take their first step on the ladder without having to support with cash deposits.
It also allows the supporter to exit the arrangement when the proprietor can afford a mortgage on their own.
How Many People Can Apply?
Up to four people can apply for this type of mortgage. However some mortgage lenders will not consider the income of all four lenders. Finding the right lender to suit your circumstances can boost your borrowing potential significantly. A mortgage broker will have the experience required to recommend the right mortgage lender for you.
Speak to an Expert!
Contact us today for expert advice and guidance on your unique mortgage and property needs. We will work with you on a one-on-one to basis to help you find the right solution for your needs.
With our experience you can rest assured that you are in good hands when it comes to securing the financing you need for your property.
Do You Pay Stamp Duty on This Type of Mortgage?
If you are a first time buyer you do not have to pay stamp duty provided you are within the limits set out by the government. Ordinarily, if you were buying a property with someone who has a home already, the purchase would attract second home Stamp Duty at a rate of 3%. However, with a JBSP mortgage, the other parties avoid triggering this liability and therefore any body helping you would not contribute to stamp duty.Is There a Joint Borrower Sole Proprietor Mortgage Age Limit?
When considering the full term of the mortgage, all mortgage lenders will base the maximum mortgage term on the oldest applicants age. The majority of lenders will go to age 75, with some going further by using retirement income. Some lenders also have maximum age the oldest applicant can be at the start of the mortgage. This is set by some lenders at age 60.What are the Advantages of a Joint Borrower Sole Proprietor Mortgage?
- Close family members can help you buy a home.
- You can take over the mortgage when you have a larger income.
- You can increase the amount you can borrow.
- There’s no stamp duty liability for the additional borrowers.
- You can get on the property ladder sooner
What are the Disadvantages of a Joint Borrower Sole Proprietor Mortgage?
- All borrowers have joint responsibility for repayments.
- The mortgage lender may restrict who can live in the property.
- You can’t use it with other housing schemes such as Help to Buy.
- Older borrowers could limit the mortgage term.
Which Banks Offer Joint Borrower Sole Proprietor Mortgages?
There are many banks now offering this type of product to clients. More and more people are finding home ownership difficult. This product was designed to allow parents and close family the option to assist their family in obtaining a mortgage without having to use savings. Banks which offer JBSP mortgages include:- Barclays
- Virgin Money
- Bank of Ireland
- Clydesdale Bank
- Skipton Building Society
Why Choose Switch?
Becoming a first time homeowner is an exciting journey, and with the right guidance and support, the process of getting a first time buyer mortgage can be straightforward. If you have any questions or need further assistance, don’t hesitate to contact us for expert advice.Why Switch Mortgage Finance
- Raising The standards of financial advice
- Making financial advice accessible to all
- Trusted & stress-free financial advice
- Friendly, personable advisors