Joint Borrower Sole Proprietor Mortgages

Joint Borrower Sole Proprietor Mortgages

This is a type of Guarantor Mortgage where the Buyer involves one or more people to help meet the affordability of the mortgage.

The joint borrowers are included in the affordability calculation but they are not listed as owners of the property.

For example, Paul is buying a home in London with a mortgage of £400k.

His current earnings are £45,000 as a software developer.

His father has offered to help out. Paul's father earns £80,000 and has no significant debts. 

A mortgage is agreed on a joint borrower, sole proprietor basis based upon a joint income of £125k.

This arrangement will continue until Paul's income allows him to take over the whole mortgage or the mortgage is paid off.

Why is Joint Borrower Sole proprietor important?

The additional borrower's income will help satisfy the affordability of the mortgage and allow a purchase to continue.

At some point in the future it is likely that the joint borrower will want to come off the mortgage. After all, the joint borrower will be restricted in borrowing on their own account. When the joint borrower transfers ownership from joint to single name there may be a potential capital gains tax liability.

Capital Gains Tax potentially applies on any increase in property value from the date the property was bought until the date of transfer or sale. 

In addition to this there would be the potential for a stamp duty charge.

Stamp duty does not just apply to ordinary house purchases but can also apply to Transfers of Equity. 

A Transfer of Equity is where a share of ownership is passed from one party to another. This CAN apply to inter-family transfers.

Both of these taxes are avoided by simply not having a share in the ownership.

The joint borrower is released from this obligation when the mortgage is cleared. This could be cleared by way of remortgage into the name of a single borrower or through the sale of property at some point in the future.

This type of mortgage is generally available in England, Scotland, Wales and Northern Ireland.

You will need a minimum deposit of 5%.

It is understood that in most instances the joint borrowers will not live in the new property. However some lenders will allow the joint borrowers to stay in the purchase property providing they sign a legal document confirming they have no rights of ownership.

No Broker Fees

NO Broker fees for Joint Borrower Sole Owner mortgages - providing your mortgage is at least £100k.

If your mortgage is less than £100k then we can still help, but there will be a fee of £199 to pay.

Why use Mortgages Direct

Mortgages Direct are a Mortgage Broker regulated by the Financial Conduct Authority - check us out at the FCA Register (enter ref 303319)

You should employ a financial adviser for this mortgage - we can help!

We can check affordability and arrange a Joint Borrower Sole Proprietor Mortgage Agreement in Principle. 

We have access to most Residential lenders including Broker only deals.

Full Illustrations are available.

Does age restrict a Joint Borrower Sole Borrower mortgage

Yes, it probably will do. Most lenders will treat the joint borrower the same as another mortgage applicant so the mortgage term should normally end when the older applicant reaches 70 or their retirement age, if earlier. However if there is a provable pension income in place then the pension income may be used to support a mortgage up to age 80.

JBSP Non Owners need to get legal advice

Most lenders insist that the non-owners obtain independent legal advice regarding their rights in this arrangement. You may be able to arrange this through the Solicitor who is managing the conveyancing. The costs of this advice are to be met by the applicant.

Joint Borrowers, Sole Owners - Frequently Asked Questions