Joining your child's mortgage without owning the home
A joint borrower sole proprietor mortgage adds your income to your child's application. What it makes you responsible for, how it affects your own plans, and what to ask before you sign.
A joint borrower sole proprietor mortgage adds your income to your child's application. What it makes you responsible for, how it affects your own plans, and what to ask before you sign.
On a joint borrower sole proprietor mortgage, you join your child on the mortgage but not on the ownership of the home. The lender counts your income alongside theirs, so they can borrow more. Your child owns the home. You own no part of it.
Because you are not buying the property, the stamp duty position is your child's alone. A first-time buyer can still claim first-time buyer relief where they qualify.
You and your child are jointly and severally liable for the whole mortgage. If your child cannot pay, the lender can ask you to pay all of it.
For as long as you remain on the mortgage.
The mortgage appears on your credit record and counts against any borrowing you apply for.
If you want to remortgage, move or borrow in later life, lenders will count your child's mortgage as your commitment.
Lenders set an age limit for the end of the mortgage, which may depend on the oldest borrower. Your age may limit how long your child can borrow over.
Lenders commonly ask parents to take independent legal advice before signing, so that they understand what they are agreeing to.
If the mortgage runs past the age you plan to retire, the lender will want to know what your income will be then. Your pensions become part of your child's mortgage application.
Think about what would happen if you needed to help with the payments after you retire, and whether your pension income could cover it alongside your own costs. If you are relying on pensions you have not looked at for years, find out what they are worth before you sign.
Families may plan for the parent to come off the mortgage once the child earns enough to borrow alone. That needs the lender's agreement, or a remortgage, based on your child's income at the time. It may not be possible when you hope.
Ask the broker how the lender treats a request to remove a borrower, and plan to review it each time your child's deal ends.
If your child dies, the home passes under their will, or under the intestacy rules if they have none. You would still be responsible for the debt. If your child cannot work through illness, the lender may look to you for the payments.
Life cover and income protection for your child protect you as well. A will for your child sets out who receives the home.
Your child's mortgage broker can explain which lenders offer this arrangement, what they will need from you and how your age and income affect the loan.
Whether you can afford the responsibility in retirement, and how it fits with your pensions and estate, are questions for a regulated financial planner. Ask the broker to introduce you to one before you sign.
This article explains how things work. It does not take your circumstances into account. Your mortgage broker can introduce you to a regulated financial planner at Equity & General where the question needs one.
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