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Joint Borrower Sole Proprietor success story

This week’s case study illustrates how Alexander Hall helped a client to secure her dream two bedroom property on a great deal with the help of her father.

Our clients' challenge

The client approached Alexander Hall with the intention of buying a 2 bedroom flat in Hampstead for £600,000. She had approached her bank directly who were not able to assist. With a deposit of £240,000 and income of £40,000, we established her maximum purchase budget at approximately £440,000. This would have helped her secure just a 1 bedroom flat in the area and she desperately wanted a 2nd bedroom which she could rent out to help cover her outgoings.

Despite her being on a graduate program with pre-determined income increases, it would have been another 2 years minimum, before she was earning the required level to achieve the desired purchase price.

Alexander Hall's solution

We broached the topic of joint borrower - sole proprietor with her and her father. We worked out that we could utilise his disposable income to achieve a higher purchase price of £590,000.

The joint borrower - sole proprietor setup was crucial, as her father owned the family home. Through a conventional mortgage application and ownership arrangement, he would have been liable for a 3% stamp duty surcharge. Joint borrower – sole proprietor mitigates this by allowing her father, in this case, to be on the mortgage but not on the title deeds. Due to the father’s age, the shorter term of the mortgage resulted in slightly higher than normal payments but the rent from the 2nd bedroom helped cover this.

Our client was happy however as she was now paying much less than the rental amount due had she waited the 2 years to buy on her own.

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