Joint borrower/sole proprietor mortgages are becoming increasingly common as more family members, such as parents, help relatives, such as their adult children, get onto the property ladder. The family member helping will act as a supporting borrower but will not own the property.
If you or your clients apply for a joint borrower/sole proprietor mortgage, the lender or mortgage provider will generally require the supporting borrower to obtain Independent Legal Advice (ILA).

What is a Joint Borrower/Sole Proprietor Mortgage?

A joint borrower/sole proprietor mortgage is a type of mortgage where two or more people apply for a mortgage together, but only one person is named as the sole owner of the property. This type of mortgage is proving popular when one person has a higher income or better credit score than the other, allowing them to take out a larger loan amount. It can also be a way for parents (the ‘bank of mum and dad’) to help their children buy a house without being charged the additional stamp duty land tax and avoiding second home stamp duty.

The Importance of Independent Legal Advice

Joint borrower/sole proprietor mortgages can be beneficial, but they do have legal complexities and risks. Everyone signing up for these types of mortgages should seek independent legal advice to ensure that they fully understand the implications.

Obtaining independent legal advice will clarify the legal responsibilities and liabilities of both the borrower and non-owner and help the non-owner understand the options if there is an unexpected change of circumstances, for example, a relationship breakdown, property sale, or financial difficulties.

Our ILA Services Include:

• We provide personalised legal consultations tailored to individual circumstances.
• Our services include thoroughly reviewing all legal documents, mortgage agreements, and contracts.
• We can also provide strategic advice for potential exit situations, such as property sale or transfer of ownership.

Contact Us

Joint borrower/sole proprietor mortgages can be complex, and so many lenders insist that borrowers obtain independent legal advice. For more information on joint borrower/sole proprietor mortgages and to discuss your ILA requirements, please enquiries@phelanindependent.co.uk or call Joe on 07597 589 266.

Frequently Asked Questions (FAQs)

1. Do both parties need independent legal advice for a joint borrower/sole proprietor mortgage?
   Although it’s not a legal requirement for both parties to seek independent legal advice, it is highly recommended. Independent legal advice ensures that each party fully understands their rights, responsibilities, and the implications of the mortgage agreement. Some institutional lenders also insist that independent legal advice is sought in these transactions.
2. How much does independent legal advice for joint borrower/sole proprietor mortgages cost?
   We offer fixed fees starting from £225 (inclusive of VAT) with discounted rates for multiple instructions or clients of NACFB members.
3. What risks are associated with a joint borrower/sole proprietor mortgage?
   Risks may include financial liability if the borrower fails to pay, relationship breakdowns, unforeseen financial difficulties or complications in the event of a property sale. For these reasons, it is important to consider obtaining independent legal advice.
4. Can my conveyancing solicitor provide me with legal advice?
   Generally, no, in most cases mortgage lenders require the non-owning borrowers to seek legal advice from an independent solicitor not involved in the transaction or mortgage to avoid any possible conflict of interest.
5. How long does it take to provide independent legal advice on joint borrower/sole proprietor mortgages?
   We guarantee advice within 48 hours of instruction acceptance and documents being provided (usually the same working day), ensuring that the conveyancing process proceeds as swiftly as possible.