From 7 October 2024, Suffolk Building Society will welcome joint borrower sole proprietor (JBSP) applications across residential, buy to let, and holiday let for UK and expat applicants, for both purchase and remortgage.
The enhancement will allow up to four people from two different households to borrow from the Society with one or two individuals being named on the property’s title deeds.
The borrowers must all be immediate family, such as parents, grandparents, son, daughter, brother or sister, and can include stepfamily and adoptive family.
Incorporating the additional income of up to three other members of immediate family, effectively boosts the borrowing capacity of the buyer(s) and supports the affordability of the proposed mortgage.
Types of family groups
The Society recognises that while JBSP can help parents who want to support their children in buying a property, it is also relevant to other family situations. Parents may also want to support a child who is going through divorce or family breakup and want to help support them take over the mortgage on their family home, or to buy out a spouse. Similarly, children may choose to financially support their parents by being named as borrowers on a mortgage, in order to help mum and dad remain in their family home.
Tax efficiencies
While the supporting family members will be named on the mortgage, and therefore responsible for ensuring that mortgage repayments are made, they will not be named on the property deeds, or have any legal entitlement to the property or its increase in value. This could make JBSP a tax-efficient way for those who already own a home (or are planning to do so) to support other family members, while avoiding tax liabilities such as additional stamp duty costs or capital gains tax.
Charlotte Grimshaw, Head of Intermediary Relations and Mortgage Sales, Suffolk Building Society said:
“We’re always looking to support first-time buyers and those stepping onto the property ladder but we also believe that joint borrower sole proprietor has many other applications which make it an appealing feature for families in differing circumstances.
Family is important, and where possible family members want to help each other. By launching JBSP we’re supporting this societal norm and providing another vehicle for the generations to pool resources in a way that goes beyond simply ‘gifting’ money.
“We know that house prices continue to rise well above average earnings and that’s affecting many people, not just those new to home ownership. For example, couples separating can mean an individual suddenly having to fund a mortgage on one salary. Joint borrower sole proprietor could be just the answer in enabling family members to support that individual to either stay in the family home, or purchase something new.”
“Alongside our manual underwriting and flexible criteria, we believe our joint borrower sole proprietor offering will help more people with home ownership when they’re faced with changes in circumstances. We look forward to seeing how different families make use of this new feature”.
