It may not be the catchiest of names but if you haven’t yet heard of a joint borrower, sole proprietor (JBSP) mortgage, chances are this year you will. The JBSP mortgage has been around ever since first-time buyers struggled to purchase property on their own and had to turn to their parents to help, combining two deposits and incomes.
But they really started to grow in popularity from April 2016 when a 3 per cent stamp duty surcharge on second homes was introduced. Suddenly, parents buying homes with their children found they had to pay an extra 3 per cent stamp duty on top because they owned another property, even though their child was a first-time buyer. The JBSP mortgage got round this by allowing two incomes to be taken into account for mortgage purposes but with only the child’s name going on the property deeds so there was no extra stamp duty to pay.
However, demand for JBSP mortgages has really taken off since last November when the Chancellor announced in his Budget that first-time buyers would not pay any stamp duty on properties costing up to £300,000 (or the first £300,000 of a £500,000 property in more expensive locations such as London). Once again, a first-time buyer purchasing with someone who is not a first-time buyer, such as a parent, would otherwise miss out on this tax break but the JBSP mortgage gets round this in a completely legitimate way.
Since the beginning of this month we’ve noticed a steady increase in enquiries from people looking for the solution of a JBSP mortgage. This increased demand is resulting in more lenders coming into this market, so rates are increasingly competitive, which is great news for borrowers. We expect this situation to only improve so do get in touch for more information.