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In the short video above, Ben Brain sat down with in-house mortgage adviser, Joe Thompson, to talk about the benefits of a “Joint Borrower Sole Proprietor” mortgage which enables first time buyers to use their parent’s income to boost their own borrowing power. The full transcript is below…
Ben: Hi I’m Ben from Hannells and today I’m here with Joe, one of our expert mortgage advisers. Now Joe, I know you do a lot of posting on your own social media channels and one of posts that got a lot of traction this week was about an interesting mortgage for first time buyers, so could you tell us a little bit more about that one.
Joe: Absolutely Ben. So the mortgage is called a “Joint Borrower Sole Proprietor” mortgage.
Ben: A bit of a tongue twister, that one.
Joe: Yeh, it is. Basically what that means is the applicant is borrowing with their parents to enable them to buy a property that they can live in on their own. They use their parent’s income to boost how much money they can borrow so they can borrow for probably a better standard of property than they could just on their own.
Ben: Right, so if I’m a first time buyer I’m thinking “Great I’m going to tap in to the bank of mum and dad to get myself on the ladder.” If I’m a parent I’m thinking “Sounds interesting, I want to help my child get a good start and get them onto the property market, but what are the implications for me as the parent?”
Joe: So the implications for the parent is they’re going to be on another mortgage. So when it comes to either remortgaging in the future or getting other sort of credit/finance, it’s going to impact in that way because they are potentially, well they do have a credit commitment there with that mortgage.
Each mortgage of this type will always point the parents towards independent legal advice so they know where they stand. But it’s a great way to help your children get on that property ladder, definitely.
Ben: Ok, you mentioned in the name there “Sole Proprietor”, so does that mean if my child is taking out a mortgage with me as the parent they need to be taking it out on their own or can they have a partner with them also included on the mortgage.
Joe: Yes they can have a partner with them also included on the mortgage. They can have up to four applicants on that mortgage so you might have a child and their partner who are buying a house and then a parent and their partner helping them out to afford that bit bigger house that they’re wanting to buy.
Ben: OK, I think this just goes to show the wide variety of mortgages that are actually available. So who would you say this type of mortgage is most suited to?
Joe: It’s not for everyone,it’s quite a niche mortgage. You’re looking at parents who are potentially mortgage free or have a high amount of income.
What you’ve got to remember is this will take into account the parent’s outgoings as well as their incomings, so that will affect the overall amount that they can borrow.
In some circumstances it won’t help applicants, but for some it’s a very good mortgage that can definitely help them out.
Ben: OK and with all things mortgage the best thing to do is to speak to a qualified adviser like Joe so if you’ve got any questions or you’d like to find out more about this mortgage in particular, leave a comment below, send us a message or get in touch on enquiries@hannells.co.uk and Joe or one of our other expert in-house advisers will be happy to answer any questions and point you in the right direction so thanks for watching, thanks for joining us Joe. I hope that’s been helpful and see you on the next one.
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