More Help for First Time Buyers

You may not have heard of a joint borrower, sole proprietor (JBSP) mortgage but they are becoming more and more popular and there are now more lenders than ever offering them. This week two more lenders started offering these mortgages, but what are they?

This type of mortgage allows a family member to be jointly on the mortgage with you, without them having to be on the deeds to the house. This means that the family member’s income can be used to form part of the affordability assessment and therefore increase the amount you are able to borrow.

This type of mortgage can be used for a wide variety of reasons and in different scenarios. For example, we have helped someone stay in the home they owned with their ex-partner. They were unable to take the mortgage on by themselves but with the help of a parent and their income they were able to do so. We also recently helped a first-time buyer to do something similar. They were unable to afford to buy a property in their area on their own salary, but a parent went onto the mortgage with them and so they were able to get the house they wanted.

A lot of people will ask why not just do a joint mortgage with a family member? The reason for this is mainly because of tax. If, for example you are a first-time buyer, you do not have to pay any tax (or stamp duty) on the first £300,000 of the property value. It is likely any family member going onto the mortgage would already own a home and therefore would not benefit from the first-time buyer stamp duty relief. However, with JBSP mortgages they will not own the home as they are not on the deeds so that avoids this issue.

Obviously, the family member being added would need to agree to be jointly responsible for the mortgage payments if the borrower were unable to make them (almost like a guarantor) so they would need to seek independent legal advice before proceeding. But this can be a great way for parents to help their kids get onto the property ladder and into a home they love.

Different lenders have different income thresholds, but the new mortgage will have to be affordable along with any existing mortgage and other bills the family member has. Your mortgage broker would be able to assess this for you and check affordability.

Essentially, JBSP is designed to help you temporarily get the mortgage you need until at some point in the future you will be able to take it on yourself and they can be taken off.

This is just one of the ways family members can help but if you want to know all your options or get more information about JBSP speak to your local mortgage broker.