Joint Borrower Sole Proprietor Mortgages

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What is a Joint Borrower Sole Proprietor mortgage?

It is very similar to having a guarantor. Family or friends can assist someone in getting on the property ladder by joining them on the mortgage

Some lenders will consider up to four applicants, though two – usually a parent and child – is more common. 

Every applicant is assessed and joint income is used for affordability. They take on the liability of the mortgage as joint borrowers but only one of them will legally own the property and be named on the title deeds.

It’s a good option for someone who perhaps doesn’t quite have the affordability right now for the mortgage, but who is likely to be able to afford it in the near future.

How does a Joint Borrower Sole Proprietor mortgage work?

It works almost exactly like a ‘normal’ repayment mortgage on a home. It is a loan secured against the property you’re buying and usually requires a deposit. Each month you pay back part of what you’ve borrowed and a bit of interest on top.

Someone goes on the mortgage with you and has their income, expenditure, and credit file assessed like any other borrower. But they don’t go on the title deeds to the property and have no legal rights over it.

Generally lenders want to see that you will be able to take on the mortgage on your own in the not-too-distant future. For example, you could be a recent graduate or starting a career with future income potential.

Is Stamp Duty payable?

Normal Stamp Duty applies only to the legal owner of the property. Anyone named purely as a joint borrower will not be liable for Stamp Duty.

First time buyers still qualify for the Stamp Duty exemption because the joint borrower won’t be named on the title deeds. Likewise, if the joint borrower already owns a property, no additional Stamp Duty will be charged because they won’t be a legal owner of the one being bought.

What are the benefits of a Joint Borrower Sole Proprietor mortgage?

The main advantage is potentially being able to borrow more than you could on your own. It’s great for people who are just starting out in possibly lucrative careers, but who don’t want to wait until they’re earning more to own their own home.

What are the disadvantages of a Joint Borrower Sole Proprietor mortgage?

One thing to bear in mind is that the overall term of the mortgage tends to be restricted by the eldest applicant’s age. This could result in a shorter mortgage term, and therefore higher monthly payments, than you were anticipating.

As a joint borrower, you are equally responsible for 100% of the mortgage payment. Your credit rating is also at risk. Any missed payments will show on your credit file and could affect your ability to obtain finance. This could also impact your personal relationship with other borrowers.

What’s more, any borrowers who are not owners will have no legal rights to the property, and don’t benefit from any increase in the property’s value over time.

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Do you have questions about mortgages? Want to know what your options are? We're happy to help.

I have a mortgage already – can I be a joint borrower?

Yes, you can. It would, however, be subject to assessment. The new lender will check your disposable income after any existing mortgage payments and property running costs to make sure you could afford the payments for the new mortgage alongside current commitments.

Please note that becoming a joint borrower can impact your own affordability, should you be looking to refinance. Your credit rating could also be affected if mortgage payments are late or missed.

There can be a legal clause on this type of mortgage that states you can’t live in the property. Most lenders will need you to take independent legal advice before signing up.

Can you have a sole mortgage on a jointly owned property?

These are very rare. Lenders typically want mortgage borrowers to match the individuals listed on the property’s title deeds.

What is the difference between a joint mortgage and a Joint Borrower Sole Proprietor mortgage?

A joint mortgage is a much more standard arrangement. It involves borrowing money on a mortgage to buy a property with someone else. Both parties are responsible for paying the mortgage and both will go on the title deeds to the property.

With a Joint Borrower Sole Proprietor mortgage, the joint borrower takes on the responsibility of the mortgage but without having any legal rights over the property.

What is the difference between a guarantor mortgage and a Joint Borrower Sole Proprietor mortgage?

Guarantor mortgages can be hard to find these days. Most lenders have replaced them with a Joint Borrower Sole Proprietor offering.

A guarantor mortgage involves someone becoming liable for the mortgage payments if the borrower misses payments. With a Joint Borrower Sole Proprietor mortgage, the joint borrower agrees to take on the responsibility of ensuring payments are made on time from the start, not just if payments are missed. It doesn’t mean the joint borrower has to make payments from their account.

How can The Mortgage Store Chorley help with Joint Borrower Sole Proprietor mortgages?

Looking to buy a house but worried about getting a mortgage alone?

At The Mortgage Store Chorley, we’ve got you covered with Joint Borrower Sole Proprietor mortgages. With this option, you can team up with a family member or friend to increase your borrowing potential, and you can be the sole owner of the property.

We’ll guide you through the process, making it easy and stress-free. Say goodbye to the hassle of securing a mortgage alone and hello to your dream home!

 

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE