For many young people, owning their own home is a dream that may take years to achieve. In some extreme cases, it might even take decades. For others, the only way to get onto the property ladder is through financial help from their family or loved ones. That assistance may come in the form of a deposit, but there are other options if you want to become a homeowner.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Many paths to homeownership
If you are fortunate enough to have family members or loved ones who are offering financial support to help you secure a mortgage, a great option to consider is a joint borrower sole proprietor mortgage (also known as a JBSP mortgage.) It’s a type of home loan that lets two people borrow money together, but only one person needs to be named on the mortgage.
For people without a sufficient deposit or poor credit, having someone with good credit and the funds needed for the process can be a lifesaver. Many young homeowner hopefuls choose to get onto the property ladder this way as it not only helps borrowers secure a mortgage, but it potentially allows them to borrow more. JBSP mortgages are the best of both worlds — they allow you to accept financial support to get a foot in the door while still retaining a sense of independence as the sole property owner.
The JBSP difference
What sets a joint borrower sole proprietor mortgage apart from others where you can have multiple borrowers is that only one borrower is responsible for repaying the debt. With other loans, if one borrower doesn’t hold up their end of the bargain, the other borrower is still responsible for the full payment amount.
With a JBSP mortgage, the borrower that isn’t the owner takes on joint responsibility for the debt and repayments but they have no legal claim to the property. This is how a JBSP mortgage is different from a joint mortgage — the ownership and financial responsibilities lie solely with one owner.
With a JBSP mortgage, both borrowers commit to contributing to mortgage payments from the start, as opposed to something like a guarantor mortgage where the guarantor would only step in to make payments if the other borrower cannot.
You can apply for a JBSP mortgage with as many as four applicants, depending on the individual provider. Even so, usually, only two incomes will formally be taken into consideration with the others acting as additional guarantees. As with all mortgages, the amount you can borrow will vary from provider to provider, but normally, they will cap the amount you can borrow at 4.5 times the combined offered income.
The best mortgage for you
Wondering if a joint borrower sole proprietor mortgage might be right for you? Before you make a decision, it’s important to get all the facts. A JBSP mortgage can be a great way to break into the property market, but it’s not a good fit for everyone.
To discuss your options, get in contact with the experts at Dental & Medical Financial Services today.