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.