A joint borrower sole proprietor mortgage adds a parent's income to a buyer's application and the full debt to the parent's name. What the parent takes on, how it meets their retirement, and where a planner comes in.
On a joint borrower sole proprietor mortgage, a parent or other relative joins the buyer on the loan but not on the title. The lender counts both incomes when assessing affordability. The buyer owns the home. The parent owns no share of it.
Both borrowers are jointly and severally liable for the whole debt. If the buyer cannot pay, the lender can pursue the parent for the full amount. The parent therefore carries a joint owner’s liability and holds no share of the property.
The arrangement helps a buyer whose own income will not support the loan they need. A parent's income closes the gap. Because the parent is not a purchaser, the stamp duty position is the buyer's alone, and a first-time buyer can still claim first-time buyer relief where they qualify.
Compared with a gifted deposit, the parent keeps their savings. Compared with joint ownership, the parent does not hold a second property. The cost falls on the parent's future borrowing and on their retirement.
Joint and several liability for the whole loan, for as long as they remain on it.
The mortgage appears on the parent's credit file and counts against their own borrowing.
A parent who later wants to remortgage, downsize or borrow in retirement will have the child's mortgage counted against them.
Lenders set a maximum age at the end of the term, which often depends on the oldest borrower. A parent in their fifties may limit how long the term can run.
Where the term runs past the parent's retirement, the lender will want to know what income they will have then.
Lenders commonly require the parent to take independent legal advice before signing, so that they understand the liability. Your file should record that the parent was told what the liability means, in writing, and when.
The parent's income supports the loan today. If the parent retires during the term, their income falls, and the lender will have assessed whether the loan remains affordable on the combined income in retirement. That assessment relies on the parent's pension income, which may come from several schemes the parent has not looked at in years.
Whether the parent's retirement income will hold up, and what happens if they need to contribute to the payments, is a pension question. The parent may also want to know what happens to their own estate and plans if the buyer runs into difficulty. Those questions belong with a planner.
Families may plan for the parent to come off the mortgage once the buyer's income grows. That needs a remortgage or a transfer of equity approved by the lender, on the buyer's income alone. It is not guaranteed, and the timing depends on the buyer's income and the lending market at the time.
Diarise a review at each product expiry to test whether the buyer can carry the loan alone. Record what you told the family about the uncertainty.
If the buyer dies, the home passes under their will or the intestacy rules, and the parent remains liable for the debt. If the buyer becomes ill and cannot work, the parent may be asked to pay. Life cover and income protection for the buyer protect the parent as well. Where you hold the permissions, that protection advice is yours.
Make sure the buyer understands that, without a will, the home may pass to someone other than the parent who is liable for the loan. A will is a matter for a solicitor.
Offer the parent an introduction to Equity & General before they sign. A planner can advise the parent on their retirement income, whether they can afford to support the payments if needed, and how the arrangement fits with their own estate. The parent consents to the introduction themselves.
A form of words for the parent: "Joining the mortgage means the lender can ask you to pay all of it, and it will count against your own borrowing in retirement. Whether that suits your plans is a pension question, which I do not advise on. A planner at Equity & General can talk it through with you before you sign."
No. The parent is a borrower but not an owner. The buyer owns the property, and the parent is liable for the whole debt.
The property is not part of the parent's estate, because they do not own it. How the arrangement fits with the parent's wider estate is a question for a planner.
You advise on the mortgage, which includes explaining the liability and the lending consequences. Whether it suits the parent's retirement and estate is financial planning advice, and you can offer an introduction for that.
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