A JBSP Mortgage - Worth considering for First-Time Buyers in Farnham, Surrey and the surrounding areas, where house prices tend to be high.
Here at The Surrey Mortgage Broker we’ve arranged well over 2000 mortgages during the last 20 years – and a healthy proportion of those have been for first time buyers in and around Farnham, Surrey, where we are based.
However, whether you’ve managed to build up enough money for a deposit yourself, or have some support from the "Bank of Mum & Dad”, with this being an attractive area with above average property prices, it can be one of the trickier areas for first-time buyers to get onto the property ladder.
As a well-established local mortgage broker, The Surrey Mortgage Broker is ideally placed to guide you through the process to find the best solution to meet your needs and it is well worth remembering that, alongside the well-known high street banks, there are literally hundreds of mortgage lenders out there offering competitive and innovative first-time buyer deals.
One of the increasingly popular options that you may want to consider is a JOINT BORROWER SOLE PROPRIETOR (JBSP) mortgage - which enable one or more family members to support the first-time buyer secure a property by joining in the mortgage application, without being on the property’s title deeds.
In some ways a JBSP mortgage is similar to what used to be known a ‘guarantor’ mortgage and we’ve listed below some of the pros and cons of JBSP mortgages compared to standard mortgages:
pros of jbsp mortgages
> Higher Loan Amounts: By combining the income of the first-time buyer and their supporter(s) (often one or more parents), JBSP mortgages typically allow for a larger loan amount than that which the first-time buyer could secure on their own.
> Property Affordability: This increased borrowing capacity is particularly beneficial in places like Farnham and the surrounding parts of Surrey and Hampshire, where property prices can be higher.
> No Stamp Duty Surcharge: Unlike a standard joint mortgage, a JBSP mortgage doesn’t trigger the additional 3% Stamp Duty Land Tax (SDLT) surcharge for second homes, because the supporter is not on the property title.
> Support Without Ownership Complications: The first-time buyer remains the sole proprietor, simplifying future transactions and avoiding potential conflicts over ownership between family members.
> Future Flexibility: Once the first-time buyer's financial situation improves, it’s often possible to remove the supporter from the mortgage without changing the property ownership, making it easier to manage or sell in the future.
Cons of JBSP Mortgages
> More Documentation: JBSP mortgages can require more extensive documentation and due diligence from the parties involved, making the application process more complex compared to a standard mortgage.
> Financial Risk for the Supporter(s): The supporter is liable for the mortgage, even though they have no ownership rights. If the first-time buyer defaults, the supporter is responsible for the repayments, which could affect their credit rating or financial situation.
> Impact on the Supporter’s Future Borrowing: The supporter’s ability to secure additional credit or mortgages for themselves could be impacted since they are tied to another mortgage.
> Potential Higher Interest Rates or Fees: Some lenders may charge slightly higher interest rates or fees for JBSP mortgages due to the perceived complexity or risk associated with them.
> Reduced Options: Not all lenders offer JBSP mortgages, so the options available may be more limited compared to standard mortgages. This could restrict the choice of rates or terms.
conclusion
In conclusion, a JBSP mortgage can be a powerful tool for a first-time buyer to secure a property that might otherwise be out of reach due to high local property prices. However, it comes with increased responsibility for the supporter and a more complex application process. Careful consideration of both the buyer’s and the supporter’s financial situations and future plans is essential before committing to this type of mortgage.
So, if you’re looking to buy your first home, please contact us for your free initial consultation and take advantage of our 20+ years’ local experience in providing tailored mortgage advice for all kinds of buyers.
How much you can borrow depends on a number of things and will vary from one first-time buyer to another. So for the best first-time buyer mortgage advice, please call 01252 759233 or contact us for a personal illustration and to discuss your specific circumstances further.
