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Home > Joint Borrower Sole Proprietor Guidance

Joint Borrower Sole Proprietor Guidance

Independent Legal Advice

All parties to the mortgage must obtain independent legal advice so that they are aware of their responsibilities and rights and what might be involved should there be a change in circumstances and the supporting borrower wants to have their name removed from the mortgage at some future date.  This will be a condition of the mortgage offer.

The supporting borrowers don’t have rights over any equity or any profit made on the property as they are not legal owners. They will however be ‘jointly and severally’ responsible for the mortgage payments and for obliging by the terms and conditions of the mortgage.

CASH SECURITY

If you offer money as collateral security for a mortgage:

  • We call this a cash security
  • The amount required will be held in a Deposit Guarantee Account with the Society
  • The account will only be in the name(s) of the supporting borrower(s)
  • BUY FOR UNI – You will not be entitled to withdraw all or part of the original balance unless we are satisfied that the mortgage debt is less than 75% LTV and the mortgage payments have been made when due for at least the previous 6 months, AND if a guarantee on income also exists we are satisfied that the assisted borrower is able to afford to continue to make the monthly payments
  • DEPOSIT GUARANTEE – The guarantee monies will be released after 7 years provided there have been no missed payments in the previous 12 months and no more than 2 missed payments in the 7 years. The society may consider releasing the guarantee monies before 7 years subject to a property valuation confirming the LTV is less than 80%
  • You could be restricting access to your money for some time because a mortgage is a long-term debt. You should therefore assess what future demands you may need to make on your investment. THIS MEANS THAT THE MONEY YOU OFFER IS AT RISK

The cash held in the account won’t be used to make the monthly mortgage repayments, but would be called upon to make up any shortfall if we had to repossess the property and if when sold, the proceeds are less than the mortgage debt plus any costs. This liability is limited to the amount of the security held in the Deposit Guarantee Account.

  • The Deposit Guarantee Account will need to be opened 14 days before completion can take place and the application forms are sent out to the solicitor with the mortgage offer.
  • The supporting borrower(s) must obtain independent legal advice before signing the Deposit Guarantee Agreement.  The advice may be provided by a solicitor at another firm from that representing the occupying borrower or from the same firm, so long as the individual solicitor giving the advice is not also advising the occupying borrower. The solicitor will send the signed Agreement to us before completion. 
  • You should obtain quotes for this.

COLLATERAL CHARGE

If you’re offering property as collateral security:

  • The Society will only take a First or Second charge on your property where it’s your main residential home
  • The maximum LTV (your current mortgage balance plus the amount of the collateral charge) must not exceed 75% of the current valuation
  • In the event of default by the borrower, any loss incurred by the Society can be recovered by calling on the collateral security. In the case of property, we can take legal action to obtain possession of your property and sell it to recover the money owed. THIS MEANS THAT YOUR HOME IS AT RISK
  • Your ability to sell your property will be restricted by a collateral charge
  • It may affect your ability to borrow money against your home in future
  • BUY FOR UNI – We will not release the charge unless we are satisfied that the mortgage debt is adequately secured by the principal security and the mortgage payments have been made when due for at least the previous 6 months
  • DEPOSIT GUARANTEE – The charge will be released after 7 years provided there have been no missed payments in the previous 12 months and no more than 2 missed payments in the 7 years. The society may consider releasing the charge before 7 years subject to a property valuation confirming the LTV is less than 80%
  • Where your property is provided as security then this residential property may be repossessed by us to recover the debt if the borrower’s mortgage goes into arrears and we have to repossess the mortgaged property and the proceeds are less than the mortgage debt plus any costs. This liability is limited to the amount of the security.
  • The supporting borrower (s) must obtain independent legal advice before signing the Collateral Mortgage Deed.  The advice may be provided by a solicitor at another firm from that representing the occupying borrower or from the same firm, so long as the individual solicitor giving the advice is not also advising the occupying borrower. The solicitor will send the signed Agreement to us before completion. 
  • You should obtain quotes for this.