Joint Borrower, Sole Proprietor (JBSP) Mortgages
A joint borrower sole proprietor mortgage, often abbreviated as a JBSP mortgage, presents a viable option for individuals who struggle to meet the affordability requirements for a mortgage independently due to factors such as low income or bad credit.
For many, a JBSP mortgage will serve as a temporary solution to attaining their own residence until they achieve sufficient income or improve their credit score so as to secure a remortgage by themselves. This article provides all the details surrounding JBSP mortgages, helping you to determine if one is the right fit for your circumstances and how you can get one. We'll cover:
What is a joint borrower sole proprietor mortgage?
Joint borrower sole proprietor (JBSP) mortgages facilitate shared responsibility for repayments among multiple applicants, these typically being family members. While all borrowers contribute, only one person assumes legal ownership of the property. The main principle behind these arrangements is that leveraging stable incomes from several applicants can enhance the likelihood of approval and increase total borrowing capacity.
For younger individuals aiming to step into homeownership sooner, JBSP mortgages offer a particularly advantageous path, bypassing the need for extensive savings over many years in order to acquire a property independently.
As such, a common instance is parents using a JBSP mortgage to help their children in entering the property market. However, conversely, these mortgages are also frequently used to aid elderly parents in securing a mortgage, often with the support of a son or daughter. As well as this, JBSP mortgages may be sought by siblings or friends who are pooling their combined income to purchase a home, even if only one of them will reside in it.
How do joint borrower sole proprietor mortgages work?
In many respects, a joint borrower sole proprietor mortgage resembles a standard mortgage. Like conventional mortgages, all borrowers undergo thorough scrutiny by lenders, assessing factors such as expenses, creditworthiness, and income to determine both affordability and that each candidate meets the eligibility criteria.
However, the pivotal distinction with a JBSP mortgage lies in the fact that only one of the borrowers, termed the proprietor, is formally listed on the property’s ownership deeds. Consequently, the other mortgage holders are not included in the title deeds and lack any legal entitlement to the property or its potential appreciation in value. Furthermore, since all mortgage holders share responsibility for repayments, missed payments could adversely impact the credit profiles of all involved.
Following the conclusion of the initial term and the expiration of any early repayment penalties, the sole owner has the option to transition to a mortgage in their name alone. And so, this arrangement facilitates an easy exit for parents or other benefactors who wish to disengage from long-term involvement in the property, enabling them to withdraw from the agreement once the proprietor can sustain a mortgage independently.
What is the maximum age you can take out a JBSP mortgage?
Several mortgage providers impose an upper age limit on JBSP mortgages, requiring applicants to be no older than 70 at the term's conclusion. However, other lenders may extend this limit up to 80 years of age, in which case they would have to be around 55 years old when taking out a 25-year mortgage.
Do you pay stamp duty with a JBSP mortgage?
Typically, purchasing a property with someone who already owns a home would incur second home stamp duty at a rate of 3%. Although, with a JBSP mortgage, the additional parties involved sidestep this obligation, as only the property owner takes on liability for the stamp duty.
Pros and cons of joint borrower sole proprietor mortgages
Advantages
Access to more competitive deals: With a larger combined income and deposit, you gain access to better mortgage products that might have been out of reach otherwise.
Expanded property options: Unlike government-backed schemes that may restrict your choices, a JBSP mortgage allows you to purchase any property deemed acceptable to the lender.
Path to homeownership: As your income grows, you can assume full responsibility for the mortgage, eventually securing sole ownership of the property.
Accelerated entry into homeownership: Joint applications expedite your journey onto the property ladder, especially if you have a lower credit score or limited credit history.
Tax advantages: Additional borrowers under a JBSP mortgage are not subject to stamp duty, offering potential savings.
Disadvantages
Shared credit risk among all borrowers: Despite lacking ownership rights, joint borrowers face equal exposure to defaults, missed payments, and associated penalties, potentially straining family relationships.
Ownership disparity: Assuming responsibility for repayments without accruing any equity may not appeal to all parties involved.
Age-related mortgage limitations: Older borrowers might encounter constraints due to mortgage term restrictions. While opting for a shorter mortgage term may resolve this issue, it often translates to higher monthly repayments.
Living restrictions: Mortgage lenders might impose limitations on residency within the property, further complicating the arrangement.
How is a JBSP mortgage different from a joint mortgage?
The primary distinction between a joint borrower sole proprietor mortgage and a joint mortgage regards property ownership. In a JBSP mortgage, not all borrowers are property owners; only the individual listed on the title deeds assumes ownership.
Conversely, in a joint mortgage, all parties intend to jointly purchase and own the property together. While JBSP mortgages are commonly used to facilitate close family members in purchasing a home, there do exist alternative options such as guarantor mortgages and shared ownership mortgages.
Which lenders offer joint borrower sole proprietor mortgages?
Mainstream banks like Barclays offer joint borrower sole proprietor mortgages, and smaller building societies like the Skipton Building Society also provide competitive financing options for those seeking this type of mortgage arrangement. Having said this, the availability of lenders offering JBSP mortgages in the UK is relatively limited. But, on the other hand, engaging a mortgage broker can significantly improve your chances of securing a suitable deal.
How to get a joint borrower sole proprietor mortgage
Your initial action in getting a joint borrower sole proprietor mortgage should involve collecting all the essential documents and paperwork. This includes proof of income such as payslips (or certified accounts for self-employed applicants), recent bank statements for both affordability assessments and demonstrating deposit funds, and identification documents.
Next, it's advisable to obtain each applicants' credit reports. Reviewing these records enables you to identify and rectify any inaccuracies or outdated information that might impede your mortgage application process. To do this, you can use our free credit check tool (£14.99 per month after the free 30-day trial). The trial and subscription can be cancelled at any time. Finally, you can proceed to identify the most suitable mortgage lender.
To ensure you get access to the best possible deals, we recommend speaking to a mortgage broker with particular experience in the JBSP market. We at The Mortgage Genie are able to provide tailored advice and guide you directly to the lenders who look most favourably on people in your situation, saving you a lot of time, stress, and money.
If you’re interested in how we can help you get a JBSP mortgage, then be sure to call 01915809890 and we’ll pair you with a specialist member of our team. And why not see how much you could borrow up to today by using our mortgage calculator?
This information is a guide only and should not be relied on as a recommendation or advice that any particular mortgage is suitable for you. All mortgages are subject to the applicant(s) meeting the eligibility criteria of the specific lender. You should make an appointment to receive mortgage advice which will based on your needs and circumstances.