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JOINT BORROWER SOLE PROPRIETOR COULD IT WORK FOR YOU?

Cliff Osborne, Andover Senior Branch Manager.

“Dear Branch Manager, my wife and I would like to help our daughter buy her fi rst property. We’ve recently heard about something called ‘Joint Borrower Sole Proprietor’ and we’re wondering what it means and if it could be an option for us. Can you give me some information about how it works?”

Of course! With the Bank of Mum and Dad remaining one of the UK’s largest lenders, and many fi rst-time buyers still struggling to access the housing market, it’s unsurprising that many parents (and grandparents) are looking for ways in which to help their children or grandchildren fl y the nest.

The most obvious of those ways is, of course, gifting a deposit, but it’s not the only one. Joint Borrower Sole Proprietor is another avenue to explore – here’s some information that we hope you will fi nd helpful.

What is a Joint Borrower Sole Proprietor Mortgage?

A Joint Borrower Sole Proprietor mortgage (sometimes known as a JBSP mortgage) allows two or more people to buy a property together, but with only one person taking ownership of that property. This is the key diff erence from a joint mortgage, where all of the property purchasers are also the owners.

The advantages

In this case, you and your wife could use your income to boost your daughter’s overall aff ordability, but without being named on the title deeds, meaning she could potentially aff ord a bigger property or a property in a more desirable location, for example.

If you are already a homeowner, a JBSP mortgage also means that you wouldn’t need to fork out for the extra 3% stamp duty applied to second homes or pay capital gains tax if and when the property is sold.

A JSPB mortgage can be used as a stepping-stone to fi nancial independence, providing the temporary support that many fi rst-time buyers need to step up on to the property ladder. If and when your daughter’s circumstances change (for example, a pay rise) she could remortgage and remove you from the arrangement. Things you need to be aware of

The mortgage application process would look very similar to buying a property solo. Income and expenses will still be considered, and there may be other criteria set by the lender that she or you would need to meet.

You should also be aware that all borrowers in the arrangement have joint responsibility for the mortgage payments. While this lowers risk for the lender, it does mean that everyone in the arrangement has fi nancial responsibility for paying the mortgage if anything were to go wrong. In this scenario, if your daughter could no longer aff ord the monthly payments, you would be liable to cover them and could also face additional fi nancial consequences, such as a negative impact on your credit score.

For more information, visit us in your local branch, book an online appointment at www.newbury.co.uk or give us a call.

Andover branch: 35 High Street, Andover, SP10 1LJ Call: 01264 361455 Email: andover@newbury.co.uk

YOUR MORTGAGE IS SECURED ON YOUR HOME. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.