Get on the property ladder with help from a family member
Sometimes you just need that extra bit of support or backing to be able to get the mortgage and therefore the property you want. Having a family member connected to your mortgage can give you a major boost to your borrowing figures and give the lender reassurance you can afford the payments.
The lenders will potentially feel more comfortable lending to you if you have a parent who can support and “guarantor” the mortgage to initially support the application by showing their extra income can help support you and additionally if things go wrong indeed to have the income to step in and cover the mortgage payments.
There are namely two options for family members to be able to support you with your mortgage officially.
Guarantor Mortgage or Joint Borrower Sole Proprietor
The difference between the two has become minimal as the years have gone past with Joint borrower sole proprietor or JBSP for short becoming the typical route nowadays but Guarantor mortgages are still certainly around.
The main difference between the two is that a Joint borrower sole proprietor mortgage means that you can apply with someone who’s willing to accept joint responsibility for making mortgage payments without having a legal claim to the property.
This point alone has significant stamp duty saving implications, as more often than not the parent helping will already have a property and won’t ideally want to “own” your property if they’re helping you out. If they do they’ll be typically likely to have to pay stamp duty as they would now own technically a second property, which is where stamp duty can kick in for them.
This differs from a guarantor mortgage, as guarantors only become liable for the debt if the mortgage applicant can’t make them at all. Both you and the non-proprietor applicant (non-owner) will need to show that you can afford the mortgage payments.
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Either Guarantor or Joint borrower sole proprietor mortgages could be a very useful route to get you on the property ladder.
You should always speak to your solicitor to obtain the most up-to-date relevant tax implications for your circumstance.
The slight complication with either of these options though is typically the lenders will need to factor in the “Guarantors” personal financial circumstance and this would include things like their current mortgage, credit commitments, income and credit score to name a few.
Equally this arrangement need not be forever and some years down the road with your finances improved to the level where you could take on the mortgage in just your own name, you could then look to remortgage and remove the guarantor from the mortgage.
Speak to one of our mortgage brokers today and we can work out if this route is best for you and how you could go about setting it all up.