Joint Borrower Sole Proprietor Mortgages

Be on the Mortgage… but not on the Deeds

An Interesting Solution

With a “joint mortgage, joint ownership” situation, both the borrowers named in the Mortgage Offer are registered as legal owners of the property.

With a “joint mortgage, sole proprietor” situation, the borrower being used to support affordability is NOT a legal owner of the property.

In both scenarios BOTH borrowers are classed legally as “jointly and severally liable” for the mortgage payments, regardless of whether you are a legal or non-legal owner.

Here are some examples of the way in which these mortgages can be used:

  1. Separation/Divorce cases where one party is the legal owner of the property, but an additional income is required to support the mortgage
  2. Using the Parents’ income can help adult children to get onto the housing ladder, without increasing their Estate Value (for Inheritance Tax purposes)

As a NON-OWNER there are other things to consider, including:

  1. Standing as a borrower on this mortgage, could impact your ability to borrow on your own home or other property in the future
  2. You may not benefit from any gain in the value of the property
  3. If you rely on the owner to pay the mortgage, and that person is late on or misses a payment, this could have a negative impact on your credit record
  4. If the owner cannot afford to take over the mortgage in the future, you may find it difficult (or even impossible) to have your name removed from the mortgage

There may be additional Stamp Duty implications on this type of mortgage, so please ask your Solicitor to confirm the cost of this.

Please take advice from your Accountant and/or Solicitor on the pros and cons from a legal and taxation viewpoint of this type of mortgage. Your Solicitor can also advise you on other requirements such as a Deed of Trust.

If you are experiencing financial difficulty and struggling to make repayments, then you can contact your lender who may be able to help taking account of your individual circumstances.

You may want to contact one of the free impartial money guidance and debt advice services such as StepChange, Citizens Advice, or Turn2Us.