Joint Borrower Sole Proprietor
mortgages
Joint Borrower
Sole Proprietor
Mortgage
A Joint Borrower Sole Proprietor (JBSP) mortgage allows multiple people to join forces to buy a property, but only one of them owns it. This type of mortgage is particularly popular among parents helping their children step onto the property ladder. Here’s everything you need to know about JBSP mortgages, including their benefits, drawbacks, and how they work.
What is a Joint Borrower Sole Proprietor Mortgage?
A JBSP mortgage is designed to help individuals, such as first-time buyers, secure a mortgage by combining the income of up to four people. Despite multiple borrowers being jointly responsible for the repayments, only one individual—the sole proprietor—is named on the property’s title deeds and legally owns the property.
This setup makes JBSP mortgages a popular choice for parents or other family members who want to assist with buying a home without taking ownership themselves. Unlike guarantor mortgages, a JBSP considers the income of all borrowers when determining affordability, making it easier to secure a larger loan amount.
How does a JBSP Mortgage Work?
While a JBSP mortgage is similar to a standard mortgage, the key difference is ownership.
Here’s how it works:
1
Application Process
Lenders assess the income, expenses, and creditworthiness of all borrowers to determine affordability.
2
Ownership
Only the sole proprietor’s name appears on the property’s title deeds. This individual is typically required to live in the property.
3
Responsibility
All borrowers share responsibility for the mortgage repayments. If one person cannot pay, the others are liable.
4
Exit Plan
Non-proprietors can exit the mortgage when the sole proprietor’s income increases enough to take over the mortgage independently. This often happens when the initial deal period ends.
Key Features and Benefits of
Joint Borrower
Sole Proprietor
Mortgages
Four benefits and features of a JBSP Mortage:
No Stamp Duty for Additional Borrowers
Unlike joint mortgages, additional borrowers are not liable for second home Stamp Duty
Flexible Lending
JBSP mortgages are available with competitive rates and a wide range of loan-to-value (LTV) ratios
Parental Support
Parents can help their children buy a home without being co-owners
Future Transition
The sole proprietor can take full ownership of the mortgage later, simplifying the arrangement
PROS OF
JBSP Mortgages
Higher Borrowing Power
Combines incomes to increase the amount you can borrow.
No Ownership for Supporters
Non-proprietors are not tied to the property long-term.
Tax Efficiency
Avoids second home Stamp Duty for parents or family members.
Access to Property Market
Helps individuals get on the property ladder sooner.
CONS OF
JBSP Mortgages
Joint Liability
All borrowers are jointly responsible for repayments, which could affect everyone’s credit if payments are missed.
Limited Use
Cannot be combined with other schemes like Help to Buy.
RESTRICTIONS
Lenders may impose age limits for non-proprietors or require the sole proprietor to live in the property.
COMPLEX EXIT
Transitioning to a sole mortgage later can be challenging if financial circumstances change.
Things to consider before
applying for a JBSP Mortgage
Consider these four important aspects of applying for a JBSP mortgage:
Take Legal Advice
Non-proprietors take on significant financial responsibility without ownership rights. Legal advice is essential to understand the implications.
Insurance
Consider income protection or mortgage payment protection to safeguard repayments.
Plan for the Future
Agree on an exit strategy for non-proprietors and plan for unforeseen circumstances, such as job loss or illness.
Compare Alternatives
Evaluate other options, such as guarantor mortgages, shared ownership, or housing schemes, to determine the best fit.
other options
Alternatives to JBSP Mortgages
Guarantor Mortgages
A guarantor (usually a parent) provides collateral, such as savings or property, but does not contribute income.
Shared Ownership
Buy a share of a property and pay rent on the remaining portion.
Tenants-in-Common Mortgages
Co-buyers own specific shares of the property, which they can sell independently.
Rent to Buy Schemes
Rent a property at subsidised rates while saving for a deposit to buy it later.
FAQ
about
JBSP
Mortgages
How many people can take out a JBSP mortgage?
Up to four people can be included on a JBSP mortgage application, but only one will own the property.
Is there a maximum age for JBSP mortgages?
Lenders often set age limits. For example, some may require that applicants be no older than 70 or 80 years at the end of the mortgage term.
What’s the difference between a JBSP and a guarantor mortgage?
A JBSP considers all borrowers’ income to calculate affordability, while a guarantor mortgage relies on the guarantor’s assets as collateral.
Do you pay Stamp Duty with a JBSP mortgage?
Additional borrowers are not liable for second home Stamp Duty, making this a tax-efficient option.
