Third Party mortgages (also known as Indirect mortgages or Joint Borrower Sole Proprietor Mortgages) are a specialist type of mortgage where there is more than one borrower responsible for the repayment of the loan, however not all of the borrowers are the registered owners of the property against which the loan is to be secured.

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This type of mortgage has become increasingly common in recent years as they provide a way for parents to assist their children onto the property ladder, without the parents having to be a joint owner of the Property. This ensures that the first time buyer status of the child is preserved (which may reduce the amount of stamp duty payable) and also avoids the additional stamp duty which is payable where one of the purchasers already owns a residential property.

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With a Third Party mortgage, the borrower supporting the application is jointly liable for the debt, but because they are not a registered owner of the property, they may have no control over the Property and and generally will not be entitled to any benefit from the Loan or the Property. As such the Lender will always insist that the supporting borrower takes independent legal advice before proceeding 

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There are considerable risks associated with this type of mortgage therefore if you are thinking about entering into an indirect mortgage it is important that you take independent Legal Advice before proceeding. Please contact us to see how we can assist.