JOINT BORROWER SOLE PROPRIETOR
What is a Joint Borrower Sole Proprietor mortgage?
This is where two or more borrowers come together to apply for a joint mortgage. Their combined incomes and deposits mean they have more borrowing power.
The borrowers share joint responsibility for the mortgage repayments, although only one is named on the title deeds as the legal owner of the property. This can be helpful for buyers whose income isn’t enough to secure the mortgage they need in their sole name but who have the support of a friend or family member willing to be added as a joint borrower. It’s similar to having a guarantor.
What is the criteria for a Joint Borrower Sole Proprietor mortgage?
Mortgage lenders consider all applicants’ income and outgoings, including existing mortgage or rent payments.
It’s important to note that the maximum mortgage term for a JBSP mortgage may be determined by the age of the oldest borrower listed on the application. However, this policy may not apply to all mortgage lenders.
Adding a joint borrower who is significantly older than the primary borrower can sometimes limit the mortgage term to the retirement age of the older borrower. This can significantly impact the amount that can be borrowed, as well as the monthly mortgage payments. Since the term would be shorter, monthly payments would be higher.
For example, if a 30-year-old applicant adds their 62-year-old parent as a joint borrower, they would need to pay off the mortgage by the time their parent retires.
Joint Borrower Sole Proprietor mortgages for first-time buyers
A Joint Borrower Sole Proprietor (JBSP) mortgage can be an excellent way for first-time buyers to get on the property ladder, as it can significantly increase their borrowing capacity.
The process is generally the same as for other buyers. However, a key difference is that first-time buyers can benefit from not paying stamp duty and other incentives. This can positively impact the overall cost of the property purchase.
When embarking on a JBSP mortgage, first-time buyers and non-legal owners must get independent legal advice. It’s also very wise to get the advice of an experienced mortgage adviser, like The Mortgage Generator.
