Some mortgage applications require a structure that sits outside the standard joint mortgage model. I recently assisted a client who needed to refinance her home while also bringing another borrower’s income into the affordability assessment, without adding that person to the property title.
The client was looking to refinance her existing property and raise additional funds, bringing the total borrowing required to approximately £1.2 million. However, her own income was not sufficient to support the level of borrowing she required.
A family member was willing to support the application and provide additional income for affordability purposes. However, as he already owned a residential property, he did not want to be added to the title of the property. The challenge was therefore finding a lender willing to structure the application so that both borrowers could be included for mortgage purposes while ownership remained with the sole proprietor.
The client also wanted the borrowing structured on an interest-only mortgage basis to help manage the monthly commitments.
OUR SOLUTION
I identified a lender that was comfortable considering the application on a joint borrower sole proprietor basis. This structure allowed the additional borrower’s income to be taken into account when assessing affordability, while the property remained in the sole proprietor’s name.
I worked with the private banking arm of a leading retail bank to secure the required facility on a competitive basis. The lender was also comfortable with the client’s preferred interest-only structure, providing a solution that addressed both the affordability challenge and the ownership requirements.
Joint borrower sole proprietor mortgages are only available from a limited number of lenders, so access to the right lender can be particularly important where an application involves multiple borrowers but only one property owner.
The case highlights how a private bank mortgage can provide greater flexibility for borrowers whose circumstances do not fit neatly within conventional lending structures. The appropriate solution will depend on the individual circumstances of the borrowers, the property and the lender’s criteria.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, property suitability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.
Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise.
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Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
