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Lenders are becoming more innovative to beat the competition: Joint Borrower - Sole Proprietor mortgages

September, 21st 2017

Changes to taxation on Buy to Let properties and poor affordability for first time buyers are forcing lenders to adapt, to become more competitive. We have seen both high street and private banks respond by adjusting their lending criteria and creating a more innovative offering1.

 
This includes the growing trend of “Joint Borrower – Sole Proprietor” (JB-SP), which can be a highly beneficial mortgage arrangement for both residential and Buy to Let properties depending on your circumstances.
 
Traditionally, with a house purchase, the names on the mortgage and the names on the property title deeds have had to mirror each other. These days, this does not always suit everyone’s circumstances, and with changes in stamp duty and affordability calculations, a mortgage has moved further out of reach for many borrowers.
 
As the name suggests, a JB-SP arrangement allows the mortgage to be in joint names, but the home ownership to be in just one person’s name. Although this facility has been around for some time, mostly via private banks, we now have access to some mainstream lenders with the ability to lend on this basis.
 
There are a few different scenarios which make good use of this option:
 
Getting onto the property ladder
Some parents have purchased property jointly with their children if their son or daughter does not earn enough to take out a mortgage in their sole name. However, since the introduction of higher rate Stamp Duty for second properties, for a home purchase of £400,000 and above, SDLT has increased from £10,000 to £22,000. Whereas using the JB-SP arrangement, stamp duty can remain at the standard level - saving £12,000 in this example.
 
Buy to Let Mortgages
Many couples have set up their Buy to Let properties in the sole name of the lowest earner for tax purposes. This was acceptable when lenders only relied upon the rental income to pay the mortgage. However, lenders now require you to have an income for Buy to Let mortgages, to meet new affordability criteria. The stricter affordability criteria make remortgaging or raising additional funds more difficult. Using a Joint Borrower - Sole Proprieter arrangement may allow the ownership of the property to remain unchanged, and potentially a remortgage with better mortgage interest rates or the option for capital raising.
 
Protecting Assets
It may also be an option for those who do not wish to be party to the home ownership for personal reasons or the tax implications. Similarly, anyone wanting to have a limited company, so that their home is not exposed as an asset that can be taken into account when their tax bill is calculated. Again a JB-SP arrangement can facilitate this.
 
With our unlimited access to the market, we may be able to arrange a mortgage for you where others cannot. Our team of highly experienced Mortgage Managers have extensive experience in arranging large and complex mortgages; with few situations, they have not yet come across.
 
If you would like to know if a Joint Borrower – Sole Proprietor mortgage might be suitable for you, please call us on 020 7519 4985. Alternatively, you can send us an email to speak to one of our specialist Mortgage Managers.
 

  • This Month's Top Fixed Rate

    Fixed rate
    Initial rate: 1.09%

    Period: 2 Year

    Rate will revert to the lender's standard variable rate currently 4.94%
    The overall cost for comparison is 4.33% APR

    1.09%

    More info
  • This Month's Top Variable Rate

    Variable rate
    Initial rate: 0.99%

    Period: 2 Years

    Rate will revert to the lender's standard variable rate currently 3.74% which will not go below a floor of 3.49% thereafter
    The overall cost for comparison is 3.36%

    0.99%

    More info

    Get This Rate


Some of this month's top interest rates are listed above; the actual rate will depend on your circumstances. Please note that this information does not contain all the details you need to choose a mortgage, ask one of our advisers for a personalised key facts illustration on 020 7519 4900. The rate displayed may become out of date at short notice.

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YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT
Changes in the exchange rate may increase the sterling equivalent of your debt

Largemortgageloans.com is a trading name of Largemortgageloans.com Ltd, 12 Pepper Street, London, E14 9RP which is authorised and regulated by the Financial Conduct Authority. We are entered on the Financial Services Register No 302228 which can be viewed here: www.fca.org.uk/register/. The Financial Conduct Authority does not regulate some aspects of buy to let mortgages, overseas mortgages and tax advice. Help and advice in regards to mortgages is available at www.moneyadviceservice.org.uk

Largemortgageloans.com Limited is registered with the Guernsey Financial Services Commission, reference number: 2269418, as a Non-Regulated Financial Services Business.

A typical fee of 1.17% of the mortgage amount is payable. Of this, 20% is payable on application and the balance of 80% on completion. For example on a mortgage application of £300,000 the fee would be £3,510 in total. Of this, £702 (20%) would be payable on application and the balance of £2,808 (80%) on completion. The total fee is non refundable. We may also be paid commission from the lender. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. Calls may be recorded for training and monitoring.
You may have to pay an early repayment charge to your existing lender if you remortgage.

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