Joint Borrower, Sole Proprietor Mortgages Offer New Option For Buyers
If you’re trying to find a property to rent in Edinburgh, or you know someone who is, you’ll know how tough the rental market is. In most cases, properties for rent in the Capital are receiving applications from a huge number of tenants within a day or two of going onto the market.
This huge excess of demand has pushed rents up, with Citylets reporting that the average rent in Edinburgh rose by almost 10% annually during the fourth quarter of 2023. Even where tenants can afford the rental payments, there will often be so many people competing for the same property that it can seem almost impossible to secure a property.
Fortunately, several lenders are offering a potential solution if you find yourself in this position, by launching Joint Borrower, Sole Proprietor (JBSP) mortgages.
What is a Joint Borrower, Sole Proprietor mortgage?
A JBSP mortgage gives people who can’t quite meet lenders’ criteria for a traditional mortgage a means to get onto the property ladder with the financial support of a family member or other trusted person. In practise, this will most commonly be in the form of parents providing support for a son or daughter to buy a property that they otherwise would not be able to afford a mortgage for.
As the homeowner, you still own 100% of the property and those providing financial support do not have the right to compel its sale.
What are the Benefits of a JBSP Mortgage?
One of the biggest benefits of JBSP mortgages is that the parents, or other 3rd party providing support, will not own a share of the property or appear on the title deeds. This means that the purchase won’t be subject to the Additional Dwelling Supplement (ADS), colloquially known as the 2nd home tax. Without a JBSP mortgage this tax, which stands at 6% of the total purchase price of a property, can present a huge financial barrier for those looking to help a family member to buy a home.
JBSP mortgages can also increase your buying power allowing you to secure a larger property than would otherwise be the case. This can make them attractive for parents who have a child studying in a city like Edinburgh. Using a JBSP mortgage they can help their child to purchase a two or three bedroom, with the additional bedrooms then being rented out. When the child graduates they can either retain the property, or sell it at that stage.
Further Information
At Warners, our dedicated purchase team work closely with a number of brokers who are experienced in dealing with JBSP mortgages and are able to search the market to find the right deal for you.
For further information, get in touch today on 0131 662 4747, or email us at jbsp@warnersllp.com and we’ll be delighted to help.
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