Right to Buy & Joint Borrower Sole Proprietor Mortgages
If you are exploring the Right to Buy scheme and wondering whether a Joint Borrower Sole Proprietor mortgage could help with your application, you are not first to ask about this.
Many people look for ways to boost their borrowing power when buying their council home.
A Joint Borrower Sole Proprietor arrangement can be a potential solution because it allows someone to support your application without being added to the deeds.
This structure can help you maximise affordability while keeping ownership in your name. This means that when you get your Right To Buy letter from the council or housing authority, it may be possible to consider adding another party to the mortgage to meet the needed affordability.
However, lenders place strict rules around how these arrangements interact with government housing schemes.
This means the reality is not always as simple as it appears. You may find that the Joint Borrower Sole Proprietor route does not align with the Right to Buy rules, and very few lenders offer this too.
What Is a Joint Borrower Sole Proprietor Mortgage
A Joint Borrower Sole Proprietor mortgage lets you apply with another person to increase affordability, even though only one of you owns the property.
You benefit from the combined income on the application, yet you retain full legal ownership. This is why people consider it when planning a Right to Buy purchase.
Parents often use this setup to help their children onto the property ladder. Relatives or close family members may also support you in the same way. The aim is to improve your borrowing power without giving ownership rights to the supporting borrower.
This structure is different from a guarantor arrangement because the additional person is a full borrower from day one. Their income and financial commitments count as part of the assessment.
Many first time buyers find this appealing, but Right to Buy rules add layers of restrictions that create compatibility problems so financial advice is strongly recommended.
Find out Your Options
How the Right to Buy Scheme Works
Right to Buy gives tenants the opportunity to purchase their long term rented council home at a discounted price. You must meet specific criteria to access the scheme. The discount can act as the full deposit for the mortgage, which gives many people the chance to buy their home without saving separate funds.
You can usually apply alone or jointly with up to three eligible family members who have lived with you for at least twelve months and treat the property as their main residence.
A spouse or civil partner can also join the application. The names must appear on your offer paperwork from the council before any mortgage application takes place.
Mortgage lenders usually require your Section 125 notice to match the names on the mortgage application.
This rule creates one of the biggest hurdles for Joint Borrower Sole Proprietor applicants who hope to use Right to Buy, so you must find a lender that is willing to consider this arrangement.
Why With Most Lenders, Joint Borrower Sole Proprietor Does Not Usually Work With Right to Buy
Although a Joint Borrower Sole Proprietor mortgage works well for many standard property purchases, it seldom fits within the Right to Buy structure, unless you pick certain lenders that will consider the application. There are several reasons for this, and you need a clear understanding before deciding on your next step.
Scheme Rules
Right to Buy requires full transparency about who will own the property. The scheme is designed to support tenants who plan to live in the property as their main home. A Joint Borrower Sole Proprietor mortgage lets someone support your borrowing without owning the property, which conflicts with the core scheme principles.
Many councils want all applicants to be future owners. If someone is on the mortgage but cannot go on the deeds, this contradicts the ownership expectations set out by the scheme, although some lenders can do it depending on the situation, and understanding who is joining the application, and why, if the Council is also willing to accept the situation.
Lender Restrictions
Most lenders that offer Joint Borrower Sole Proprietor products do not allow them to be combined with discounted purchase schemes.
Lenders treat Right to Buy and Shared Ownership as government schemes with unique criteria, and they generally want simple ownership structures.
Right to Buy already creates a specialist scenario. When you add a Joint Borrower Sole Proprietor arrangement, the pool of lenders willing to support the application becomes extremely limited.
Legal and Practical Conflicts
A supporting borrower on a Joint Borrower Sole Proprietor mortgage does not have ownership rights, yet carries full responsibility for the mortgage.
This clashes with Right to Buy rules that expect applicants who join the purchase to become joint owners. This is one of the main reasons why it is harder to find a lender willing to approve this combination.
Borrowers on a Joint Borrower Sole Proprietor application that are not going on the deeds must take independent legal advice to ensure they fully understand their obligations along with the impact the mortgage may have on their borrowing capacity in the future.
Conclusion
A Joint Borrower Sole Proprietor mortgage can be a helpful tool when you want to increase affordability while keeping full ownership.
However, it is a harder application to place alongside the Right to Buy scheme due to lender restrictions, ownership rules, and legal conflicts.
There are however potential options available depending on who the second borrower would be, their situation and the Council also approving them to go on the mortgage.
For tailored advice on your Right to Buy options and support with your mortgage and protection needs, contact Kerr and Watson today.
