Joint-Borrower-Sole-Proprietor Mortgage

Pat1000

My son's landlord is intending to sell the property and he would like to buy it. My son is single and self employed. I'm wondering if we would be eligible for a Joint-Borrower-Sole-Proprietor Mortgage.

My own earnings are enough to obtain a mortgage myself, but I would prefer not to be on the title deeds for capital gains purposes.

My son has enough savings to pay the deposit. However, his earnings at the moment are low. 

Does it matter what the sole proprietors earnings currently are if the other borrower can cover the mortgage repayments themselves if need be?

Thank you for your help.

kingstreet

As long as both incomes are sufficient to run both households, affordability can usually be met.

silvercar

The who the point of having the joint borrower is that their income will be used to assess whether the mortgage is affordable. You do need a discussion with your son about who is actually going to pay the mortgage, you may also want to plan the future eg at what point will you want to come off the mortgage. If you are nearing retiring, it may be worth ensuring that you choose a lender that is likely to remain in the market for a long while. You don’t want a situation where the mortgage company no longer offers decent mortgage rates and you have retired, leaving your son effectively a mortgage prisoner, stuck on a high SVR because the lender no longer wants to be in the mortgage market and your son unable to move mortgages due to self- employment or lack of sufficient income.

Pat1000

@kingstreet, @silvercar. Thank you for your comments. My wife and I can afford the mortgage payments on our own. I'm only 50. The house requires a lot of work. We are intending to do it up and will probably sell it. My son has recently stated a business and so his income is low at the moment. Would a mortgage company base it mainly on the earnings of my wife and I or would they expect him to earn a certain amount? He has enough savings to pay the deposit. 

kingstreet

If he's recently self-employed his income may not be included at all.

silvercar

Pat1000 said:

@kingstreet, @silvercar. Thank you for your comments. My wife and I can afford the mortgage payments on our own. I'm only 50. The house requires a lot of work. We are intending to do it up and will probably sell it. My son has recently stated a business and so his income is low at the moment. Would a mortgage company base it mainly on the earnings of my wife and I or would they expect him to earn a certain amount? He has enough savings to pay the deposit. 

If you and your son are going on the mortgage, it is both of your earnings that will be looked at. Your wife’s earnings will not picture as she won’t be on the mortgage (save that your wife’s earnings may be used to show she can pay toward outgoings on your home). The lender won’t care between you and your son, who earns what as long as jointly you have sufficient income. As an extreme example, a joint proprietor, single borrower mortgage could be used to buy a student house for the offspring to live in while studying at university, where the student has no earnings and only living off their student loan and parental input.

pjs493

kingstreet said:

If he's recently self-employed his income may not be included at all.

This. My cousin and her husband applied for a joint mortgage when she was in her third or fourth year of running a successful business with a £1million a year turnover. The mortgage company refused to accept her income at all even though it was substantial and consistent. They had to take out a mortgage solely on the basis of her husband's income. Needless to say there were able to quickly become mortgage free by making the permitted overpayments and then saving up enough money to pay off the balance when it came up for renewal.