If you’ve been wondering how you can get help from your parents to get onto the property ladder because you don’t meet strict affordability criteria on your own, a Joint Borrower Sole Proprietor (JBSP) mortgage could be an alternative to taking a joint mortgage with a parent.
What’s the difference between a JBSP mortgage and a joint mortgage?
With a mortgage held in joint names, parties named on the mortgage are also listed with the Land Registry as joint owners of the property. With a Joint Borrower Sole Proprietor mortgage, parties named on the mortgage are jointly and severally liable for the mortgage debt, but only one of the parties is named on the deeds as the property owner.
Why might I need to have another party on the mortgage?
If your income is not high enough to take out the mortgage in your own name, adding another person to the mortgage means their income will also be assessed for affordability as part of the process. Adding a second supporting income could be enough to get you the mortgage you want, and onto the property ladder. When your income is high enough to sustain the mortgage payments alone, you can remortgage to remove the additional borrower.
Why wouldn’t I just get a joint mortgage?
With a joint mortgage, the other party to the mortgage will own your property with you; this means there could be implications if, as is likely when a parent is to be on the mortgage, the other named borrower is already a home owner. As a first time buyer, you are eligible for a reduction in stamp duty land tax (SDLT), but purchasing with an existing homeowner means that not only are you no longer entitled to this reduction, but the purchase will actually be subject to second property SDLT.
With a JBSP mortgage, if you are a first time buyer and are to be named as the sole proprietor, you should still be eligible for the SDLT reduction.
What are the implications for the borrower that is not named as a property owner?
Despite not being named as a legal owner, the borrowers named on the mortgage are still liable for the debt; this means there is an obligation for the mortgage payments to be met regardless of which named borrower is paying, whether that is jointly or individually. The lender usually stipulates that the borrower who is not named as the homeowner takes independent legal advice to ensure this is fully understood.
How do I get a Joint Borrower Sole Proprietor mortgage?
While this type of mortgage is becoming more popular for parents to help their children onto the property ladder, it’s still not available from all lenders, and some are not available without going through a broker. Taking specialist mortgage advice, particularly when it comes to more complex situations such as a JBSP mortgage, can save you a lot of time and headaches, and help you find the most appropriate mortgage deal for your circumstances.
If you think a Joint Borrower Sole Proprietor mortgage could be right for your circumstances, you can contact Dee on mortgage@lazenbysfs.co.uk
