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?
Most lenders allow up to four people to be named on a Joint Borrower Sole Proprietor (JBSP) mortgage. However, only one person is listed on the property title and legally owns the home. The additional borrowers are named on the mortgage but have no ownership rights.
Is there a maximum age for JBSP mortgages?
Yes. Most lenders apply a maximum age limit, often requiring that borrowers are no older than 70 to 80 years at the end of the mortgage term. Age limits vary by lender and can depend on retirement income and affordability.
What’s the difference between a JBSP mortgage and a guarantor mortgage?
With a JBSP mortgage, all borrowers’ incomes are taken into account when assessing affordability, and all borrowers are jointly responsible for the mortgage payments. A guarantor mortgage, by contrast, relies on a guarantor’s income or assets as additional security rather than treating them as full borrowers.
Do you pay Stamp Duty with a JBSP mortgage?
In most cases, additional borrowers on a JBSP mortgage are not treated as property owners for Stamp Duty purposes. This means higher-rate Stamp Duty for second homes does not usually apply, provided the sole proprietor does not already own another property.
Who typically uses a JBSP mortgage?
JBSP mortgages are commonly used by first-time buyers who need help with affordability. Parents or close family members often join the mortgage to support borrowing, without needing to be added to the property title.
Can parents be joint borrowers on a JBSP mortgage?
Yes. Parents are frequently joint borrowers on JBSP mortgages, using their income to help support affordability. They are named on the mortgage but do not own the property unless they are also added to the title, which is not typical for JBSP arrangements.
Are all borrowers jointly liable for the mortgage?
Yes. All borrowers named on a JBSP mortgage are jointly and severally liable, meaning each borrower is legally responsible for ensuring the mortgage is repaid, even though only one person owns the property.
Can a JBSP mortgage be used for remortgaging?
In some cases, yes. A JBSP mortgage can be used to remortgage an existing property, depending on lender criteria and affordability. Lenders will assess income, age, and exit strategy in the same way as for a purchase.
Can the joint borrowers be removed later?
Often, yes. Some lenders allow joint borrowers to be removed at a later date, usually once the sole proprietor’s income is sufficient to support the mortgage on their own. This is subject to affordability checks and lender approval at the time.
Is a JBSP mortgage suitable for buy-to-let?
No. JBSP mortgages are designed for residential properties only. Buy-to-let mortgages follow different rules and structures, and JBSP arrangements are generally not permitted for investment properties.
Does a JBSP mortgage affect the joint borrowers’ ability to borrow elsewhere?
Yes, it can. Because joint borrowers are named on the mortgage, the debt may be taken into account when lenders assess their own future borrowing, even though they do not own the property.
