1 April 2024

Joint Borrower Sole Proprietor Mortgage In April 2024

What is a Joint Borrower Sole Proprietor Mortgage?

With property prices on the rise in the UK, people are increasingly keen not to pay rent but instead invest money into monthly mortgage repayments which will get them on the property ladder.

However, it can be very difficult to secure mortgage approval without some kind of financial assistance and JBSP mortgages offer a way around this.

A JBSP mortgage is a home loan that is taken out by multiple borrowers. JBSP mortgages can be used to purchase properties that require more than one person’s financial strength to buy them.

Despite multiple people being legally responsible for managing the mortgage debt, only one person has a legal claim to ownership of the property.

It is a great way of boosting affordability for first-time buyers in the UK and getting them on the property ladder.

A Joint Borrower Sole Proprietor Mortgage Explained

These types of mortgages are a slightly confusing concept so let us use an example to help make this clearer. Let’s say you wanted to buy a house but your salary did not allow for it at this stage in your career.

If you were confident that your salary would increase steadily over the coming years, you could get help from a family member or another party willing to help you with mortgage contributions until you were able to afford it on your own.

If you had people willing to help you with this, then you would open up a joint borrower sole proprietor mortgage and use your savings (along with the help of the other person’s money) to put down a deposit. The two of you would contribute monthly mortgage payments until you were able to manage the payments on your own.

Typically, only the owner would be allowed to reside in the property. The joint borrower would have to reside elsewhere.

The non legal owner would have no gain in the property whatsoever, whether it be from rental income or an increase in the property value.

This option can be useful for anyone who wishes to purchase a house but cannot afford to do so by themselves. Adding someone else’s income and credit history to the mix can help people who are starting out in their career and have a low credit score.

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Benefits of a JBSP Mortgage

A joint borrower sole proprietor mortgage can benefit many types of borrowers, especially those who cannot currently afford to buy their first home and get on the property ladder. With the average UK house price now on the rise, this could become an increasingly popular type of mortgage deal.

A joint borrower sole proprietor mortgage will let the homebuyer borrow a larger mortgage but keep the interest rate lower due to the fact that you are joining the incomes of up to four people together.

Your monthly payments will be lower than they would if you took out two separate mortgages because you are splitting the costs and the terms between multiple people.

Most lenders will offer a similar rate compared to standard sole applicant mortgages.

If you manage to get accepted onto a JBSP, you will have a chance to improve your low credit rating and therefore save money by obtaining a lower interest rate the next time you remortgage.

It can allow parents to give their children a sense of independence whilst still helping them financially and it is a great way of closing the affordability gap for first time buyers.

Your family members will not have to pay second home stamp duty since only the homeowner is listed on the title deeds.

Drawbacks of a JBSP Mortgage

A joint borrower sole proprietor mortgage does have its downsides.

While it can be very useful in many situations, it is not always an option. Some lenders will flat-out refuse to offer you a JBSP mortgage while others will allow you to take out this type of loan but at higher rates.

All parties involved in the mortgage are jointly liable for the mortgage repayments so there is a potential credit risk for the second borrower. If the legal owner defaults on their payments, the secondary borrowers will be liable for the mortgage payments and this could go on to affect their credit rating.

If the legal owner cannot afford the mortgage payments and the non-legal owner wishes to be taken off the mortgage, you could be faced with a costly legal battle.

For this reason, many lenders refuse to offer JBSP mortgages when there are multiple owners because it is difficult to predict what will happen in the future. You may find it difficult to obtain a JBSP due to the intensive credit checking process.

Recommendations for obtaining a JBSP

If you are interested in taking out a JBSP mortgage, make sure that you discuss your options with your mortgage lender.

The most important part of getting any type of home loan or mortgage is having an honest conversation about finances with your potential lenders so they can tell you if this type of loan is right for you and your situation.

What is the difference between a Joint Borrower Sole Proprietor mortgage and a joint mortgage?

A joint mortgage is where two or more people borrow money to buy a home together and are both equal owners of the property.

A JBSP mortgage is a subtly different type of joint mortgage arrangement. Whilst all financial contributors have a joint responsibility to make mortgage payments, there is only one named owner.

This is why it is a mortgage most typically popular with parents and children or those with particularly close and trustworthy relationships.

With a JBSP, since the secondary borrower has no legal ownership of the property on the title deeds, you will qualify for any ‘first time buyer’ benefits (for example, stamp duty relief). This would not be the case with a joint mortgage if one of the parties already owned a property.

What is the difference between Joint Borrower Sole Proprietor and guarantor mortgages?

A guarantor mortgage is where someone agrees to take on the responsibility of your loan only if you are unable to make your monthly repayments.

The main way in which the JSBP differs from guarantor mortgages is that in this case, the party agrees to make the financial contributions from the start.

Typically, this would be a parent or child who has a good credit record and can afford to pay any money that you should default on.

Who can use a JBSP mortgage?

A JBSP mortgage can generally be obtained by people who have a secure source of yearly income and a good credit history.

Up to four applicants can take out the mortgage together and in general, these people should all be family members of some kind.

It is usually issued to those with stable jobs and family commitments. Your lender will carry out checks on both parties to see whether it is worth the risk of issuing a JBSP mortgage.

The maximum age limit for undertaking this kind of mortgage is typically around 80 years old for when the mortgage term is completed. You should take this maximum age into consideration when considering the length of the mortgage term you choose.

You don’t actually have to be a first time buyer to take out a JBSP and you can even change from a standard mortgage to a JBSP if your situation requires it.

Because this type of loan involves only one house owner, you will need to make sure that all lenders agree on how you should be named on the deed before signing off on anything final.

What if my co-borrower cannot afford to pay their share of the mortgage?

When you apply for a JBSP Mortgage, both parties will need to sign an agreement about who is responsible for what.

This agreement will outline how much each party is expected to pay on a monthly basis and who will be responsible if there are any payment defaults or late payments.

If one of the earners cannot afford their share, you will need to go back to your lender and explain your situation in order to get terms that work with all involved parties.

A joint borrower sole proprietor mortgage can benefit many types of borrowers, especially those who cannot currently afford to buy their first home and get on the property ladder.

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Can I remortgage with a JBSP?

You can remortgage with a JBSP and this is particularly relevant when you feel that you are in a position to be financially independent and contribute to the mortgage without any help from the supporting borrower.

You can release the other party from their mortgage obligations by remortgaging with your current provider or by switching to a new mortgage provider.

In this instance, in order for your new mortgage to be approved, you would need to provide evidence of a considerable rise in your salary to show that you can now afford the mortgage on your own.

In many cases, the JBSP mortgage is undertaken as a temporary step as first time buyers get their way onto the property ladder. Therefore, remortgaging is perfectly possible.

What does being joint tenants or tenants in common mean?

Joint tenants

As joint tenants (sometimes called ‘beneficial joint tenants’) you have equal rights to the entire property. If you die the property will be passed automatically to the other owners. Additionally, you can not pass on ownership of the property in your will.

As the JBSP is not a joint owner sole proprietor mortgage, the joint borrowers will not have equal rights on the property deeds.

Tenants in common

As tenants in common, you will own different shares of the property and you can pass on your share of the property in your will when you die rather than the property automatically passing to the other owners.

Joint mortgage with non-UK resident

It is possible to get a joint mortgage as a non-UK resident as long as you meet the lending criteria. The lender will carry out checks on both parties to see whether it is worth the risk of issuing a JBSP mortgage.

The only issue with being a non UK resident is that it makes it harder to validate your background, income and credit history.

What banks offer JBSP mortgages?

Since it is quite a niche form of mortgage, not all high street banks will be able to offer this option to you.

It is worth getting in touch with an independent mortgage broker who specialises in helping first time buyers find affordable mortgages.

Starting your JBSP mortgage application

The first step in starting your mortgage application is to speak to a mortgage advisor. They will be able to provide you with all the information you need about JBSP mortgages and answer any questions you may have.

They will also help you to start putting together the paperwork you need in order to make an application. Your mortgage advisor can also help you find the best deal for your specific circumstances and advise on the right lender for you.

The next step is to provide your advisor with some personal information so they can carry out a credit search.This is so they can get a full understanding of your credit history and current financial situation to ensure that you, along with your nominated family members, will be able to keep up with your monthly repayments..

Once your advisor has all the information they need, they will be able to give you a full breakdown of the best mortgage deal available, what mortgages meet your requirements and which mortgage lenders will be most likely to accept your application.

Once you have chosen a mortgage that is most suited for your personal circumstances, you can finalise putting together the paperwork required. This includes proof of earnings such as payslips, forecasting information about future income combined with proof of assets – this could include things like savings accounts or other investments.

Your advisor will present all the information they have collected from your search and help you put all the necessary documents into a single folder so that it’s ready to submit.

Alternatives to a JBSP mortgage

If you think that joint buyer sole proprietor mortgages sound too high risk for your specific situation, but you have a family member who is willing to help you buy a residential property, then there are some other options available.

One common alternative is to have a guarantor who can take on some of the financial risk in making mortgage payments. This ‘guarantor mortgage’ might be useful if you are looking for a lower monthly payment.

Alternatively, if you are fortunate enough to have a family member (or family members) who can help you financially but they don’t want to be legally bound by the conditions of a JBSP mortgage, they could gift you some money to put towards your mortgage.

They could also separately loan you the money with the help of a solicitor to provide independent legal advice.

Your mortgage broker should be able to explain all your options and help you decide which one is right for you.

Article author

James Lloyd

I am the primary writer and author for Help and Advice, having originally helped start the site because I recognised that there was a need for easy to read, free and comprehensive information on the web. I have been able to use my background in finance to produce a number of articles for the site, as well as develop the financial fitness assessment tool. This is a tool that provides you with practical advice on improving your personal financial health.

Outside of work I am a keen rugby player and used to play up to a semi-professional level before the years of injury finally took their toll. Now you are more likely to see me in the clubhouse enjoying the game.

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Frequently Asked Questions

What is a Joint Borrower Sole Proprietor Mortgage?