Just a few weeks ago another mortgage lender we work closely with launched a joint borrower sole proprietor mortgage range, aimed at assisting parents in getting their children onto the housing ladder without being on the title deeds. This means that the property is solely owned by the child. The parents, as a non-legal owner, will have no entitlement to the property (including any rental yield if the property was let).
The key advantages of joint borrower sole proprietor mortgages are that there is no stamp duty surcharge payable by parents, the parent’s income is used when assessing affordability which may help to increase the amount the child can borrow, and the parents will be able to assist them if they struggle to make repayments.
And the joint borrower doesn’t necessarily have to be a parent, some lenders will also accept grandparents and close relatives to be named on the mortgage. This makes this type of mortgage also a fantastic option for people who have been through a major life event, such as a divorce, and now need the support of a family member on the mortgage to enable them to remortgage their current property or purchase a new property.
Joint borrower sole proprietor mortgages have grown from strength to strength following the government implementing a 3% stamp duty charge on second homes because they allow the parents and family members to better support their family during challenging times. For example, the average deposit for first-time buyers has hit £80,000 in London and £20,000 outside of London*, house prices continue to rise and mortgage lender’s affordability assessments have become more comprehensive.
A few important things you should know …
• The maximum age of one of the applicants on the mortgage can be as high as 80 years, which means the mortgage can be spread over an affordable term and grandparents can even be named on the mortgage
• Many lenders offering joint borrower sole proprietor mortgages also allow the deposit to be gifted from a family member
• Usually up to four borrowers can be considered on one mortgage application, which means four incomes can be taken into consideration when assessing affordability
• Joint borrower sole proprietor mortgages can be used for customers who are looking to purchase a property for themselves or an investment property.
Please contact us for more information on whether a joint borrower sole proprietor mortgage is the most suitable solution for your borrowing needs.