How does a joint mortgage sole proprietor work?
We find out how a joint mortgage sole proprietor works. All your frequently asked questions answered.
by Mark Robinson, Director – Albion Forest
How Does a Joint Mortgage Sole Proprietor Work?
When it comes to buying a home, many people are looking for ways to make the process easier and more affordable. One option that is becoming increasingly popular is a joint mortgage sole proprietor.
This type of mortgage allows two people to purchase a home together, while only one person is responsible for the mortgage payments. In this article, we’ll discuss how a joint mortgage sole proprietor works and the advantages and disadvantages of this type of mortgage.
What is a Joint Mortgage Sole Proprietor?
A joint mortgage sole proprietor is a type of mortgage that allows two people to purchase a home together, while only one person is responsible for the property. The person who is responsible for the property is known as the sole proprietor.
The other person is known as the co-borrower. Both parties are responsible for the down payment, closing costs, and other expenses associated with the purchase of the home. It is worth noting you can have up to 4 people on this type of mortgage, and generally have 1-2 owning the property.
Advantages of a Joint Mortgage Sole Proprietor
The main advantage of this scheme is generally considered to be the ability to borrow a lot more utilising a second persons income. This is generally a family member. This can be particularly useful for people on a low income or at the start of a career.
Most lenders will want a long term strategy for the proprietor to take on the mortgage on their own at some point.
Disadvantages of a Joint Mortgage Sole Proprietor
While there are many advantages to a joint mortgage sole proprietor, there are also some potential drawbacks. The main one being that the non-proprietor will likely have this mortgage on their credit file. This therefore means that it could affect their credit rating and ability to take out other loans or credit agreements.
Requirements for a Joint Mortgage Sole Proprietor
In order to qualify for a joint mortgage sole proprietor, both parties must meet certain requirements. First, they must have a deposit of at least 5% of the value of the property. They must also usually meet certain credit history criteria. Depending on the JBSP Lender they may have various different criteria, for example they may have different age requirements, or they may have a higher of lower affordability calculation.
Conclusion
A joint mortgage sole proprietor is a great option for two people who want to purchase a home together whilst only have 1 own the property. Allowing people that may not usually be able to borrow as much to get a mortgage. However, there are some potential drawbacks, such as the liability for the mortgage without home ownership for the non-proprietor. In order to qualify for a joint mortgage sole proprietor, both parties will usually need to meet certain requirements, such as a certain level of credit score, or a deposit of at least 5%
Got a question on Joint Borrower Sole Proprietor (JBSP) Mortgages? Check out our Main JBSP Page or get in touch!
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