What is Joint Borrower, Sole Proprietor?
This mortgage is where two or more people (borrowers) are named on the mortgage; however only one person will be named as the legal owner (proprietor) on the land registry. All parties named on the mortgage are equally and severally liable for the mortgage debt.
What are the benefits of a Joint Borrower, Sole Proprietor Mortgage?
There are a number of benefits but these benefits will often be specific to the individual and what they are trying to achieve, we’ve listed some examples where these might be relevant:
- Increased Affordability: You can use all incomes of the borrowers on the mortgage but only one-person is planning to live or be the owner of the property. This means a parent, friend or loved-one can help by joining the mortgage and adding more income for the mortgage application, this will help achieve the mortgage-level required to purchase the home they need and cover any shortfall of lending they’d achieve on their own
- Tax Planning for Investment Purposes: These can often be used when purchasing BTL or Investment properties; you could have a married couple or civil partnership where one-person is in the higher tax bracket or already owns a property but they want to purchase an investment property. You could take the mortgage from the person that does not own a property or is on a lower-tax bracket to maximise tax allowances and mitigate stamp duty for second properties at an increased rate. We recommend speaking to a Tax Expert prior to making any decisions around your tax planning.
There are some considerations on these mortgages:
- All borrowers are jointly responsible for the mortgage payments; however the owner of the property is entitled to the increased value and asset-value of the home. Therefore those taking risk of putting their income to the application will receive no benefit
- All borrowers are still required to complete all checks for a normal application, this is not a ‘lesser-application’ or ‘checking-process’ for those not being the owner. It is a normal joint application and lenders will complete credit checks and other forms of income verification prior to making a mortgage offer.
In majority of cases, mortgage lenders will require the ‘borrowers’ to have separate legal representation to ensure they have had independent advice on their responsibilities as a borrower and their ‘non-entitlements’ as an owner.
What Mortgage Lenders Offer these types of arrangements?
- Barclays
- Metro
- Principality
- Newcastle Building Society
- Clydesdale
- Vida
- Skipton Building Society
This is non-exhaustive, purely to highlight options available in the market and is subject to change where lender policy changes.
Speak to a Mortgage Expert
These mortgages are complex and have a lot of considerations as well as lenders have bespoke criteria. Our Mortgage Experts can provide access rarely found in a google search, therefore it’s a good idea to speak to one of our Mortgage Experts and we can advise on the most suitable lender.