HomeFirst Time BuyersJoint borrower sole proprietor mortgages explained

Joint borrower sole proprietor mortgages explained

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HomeFirst Time BuyersJoint borrower sole proprietor mortgages explained

Joint borrower sole proprietor mortgages explained

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Last reviewed on 8th January 2022

Often referred to as a JBSP mortgage, a joint borrower sole proprietor mortgage can help first-time buyers to get on the property ladder. Homebuyers can get help in other ways, such as guarantors or gifted deposits, but a joint borrower sole proprietor mortgage is completely different.

This guide will explore JBSP mortgages and similar options that may also be suitable for getting help with a mortgage. You can also make an enquiry with our experts if you need further help.

What is a joint borrower sole proprietor mortgage?

A joint borrower sole proprietor mortgage allows parents or family members to help pay towards a mortgage. This is ideal for situations where parents can offer help, without co-owning a property.

JBSP mortgages also offer flexibility. For instance, parents can contribute as much as they want to each month. Once homeowners are able to repay the mortgage on their own, parents and family members can reduce contributions.

You can also benefit from getting a larger mortgage than you otherwise would. If you’re on a low income or want to borrow more than you’re able, a JBSP mortgage can allow you to do so. This is because lenders will assess income across multiple applicants rather than just your own. As a result, you can get a larger mortgage and keep sole ownership of the property.

Without getting help from an additional borrower, you may struggle to get the mortgage amount you require. In other words, you can reap the benefits of a joint mortgage application without sharing the ownership of your home.

How does a JBSP mortgage work?

Up to four applicants can apply for a JBSP mortgage on a single property. Each mortgage lender varies in their criteria, but typically, four applicants are the maximum for any joint mortgage. You can also apply with just one additional applicant. Lenders will then assess the incomes of each applicant to calculate the amount they’ll lend.

While most lenders require helpers to be family members, other lenders don’t have restrictions on who can be a non-proprietor.

Criteria and key features

  • The homeowner must live in the property
  • Non-proprietors can’t reside in the property
  • Only the homeowner has ownership rights
  • Non-proprietors have no ownership rights
  • Gifted deposits may be accepted
  • Repayment mortgages only

Can I take sole responsibility of my mortgage?

Yes, a JBSP mortgage is designed so that when you’re able, you can take sole responsibility of repaying your mortgage. The main aim is to help first-time buyers to get a mortgage while reducing a lender’s risk. Many first-time buyers simply don’t earn enough to get a suitable mortgage.

Once your income increases or you feel financially able, you can remortgage your home. Doing so will remove your family members from the mortgage. Furthermore, their legal responsibility of helping to pay the mortgage will also end. That being said, family members can reduce the amount they pay towards the mortgage at any time, as long as the mortgage is still paid in full.

Is a joint mortgage different to a JBSP mortgage?

Yes, a joint mortgage is different to a JBSP mortgage. A joint mortgage allows multiple applicants to buy a home and repay the mortgage together. This is common for couples, friends and even property investors. A joint mortgage also means that the liability of repaying the mortgage is shared. Furthermore, each joint applicant will be a legal owner of the property.

A JBSP mortgage is different in this way as those helping, such as parents will have a legal responsibility of repaying the mortgage, but won’t have any ownership rights. This can also save parents from having to pay additional 3% stamp duty charges for second properties.

How is a JBSP mortgage different to a guarantor mortgage?

Guarantors agree to cover mortgage arrears in cases where the mortgage isn’t repaid. Lenders also only lend on the basis that the applicant has a guarantor. This may be because of a shortcoming with the applicant’s assessment such as a small deposit or credit issue.

Similar to a JBSP mortgage, guarantors also won’t have any legal ownership of the property. The difference is that those helping, such as parents are required to contribute towards the payments immediately, rather than waiting for a debt to occur.

Learn more: What is a guarantor mortgage?

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What advantages do joint borrower sole proprietor mortgages have?

The main benefits of JBSP mortgages include:

  • Easier for first-time buyers to get a mortgage
  • Lowers risk for lenders
  • Less chance of mortgage arrears
  • Borrow more than you’d otherwise be able to
  • Retain sole ownership while sharing liability
  • No additional stamp duty for those helping

Trying to get your first mortgage can be difficult, especially with the increase in house prices. Saving a 5% deposit can sometimes be a struggle and even then, the rates on offer can be very high.

At the end of 2021, the average UK house price was a huge £276,091. So, a 5% deposit would be almost £14,000 based on this figure, which is quite an ask for most first-time buyers. With a JBSP mortgage, you’ll still need a deposit but you can receive help from family members. As you can borrow more with a joint application, you may be able to get a mortgage with a smaller deposit.

Are there any disadvantages?

There are risks involved with JBSP mortgages, as there is with any mortgage or loan. There’s also a risk for your family members helping you, as they’re legally liable to pay the mortgage, even if you don’t.

Situations can also change and if relationships turn sour, payments towards the mortgage are likely to stop. It’s also not easy for family members to simply remove themselves from their legal obligation. If you’re unable to repay the mortgage by yourself because you no longer receive help, you could face losing your home.

What if my circumstances change?

Circumstances rarely stay the same, so having a plan in place is always advised. For instance, if you first take out a mortgage on a JBSP basis, but then want to share the mortgage with a partner, you’ll need to switch mortgage types.

A joint mortgage would be ideal, but you’d also be sharing the ownership with your other half. If you’d want to retain sole ownership, you may want to keep your mortgage on a JBSP arrangement, but have your partner help you with paying the mortgage.

Joint borrower sole proprietor mortgage lenders

The number of lenders offering JBSP mortgages are limited. This is because it’s still classed as a specialist product which isn’t as common as other mortgages for first-time buyers.

Some lenders are also strict in their assessment process. For instance, they’ll only accept applicants over a certain age and with a good credit score. Those helping will also be assessed on their age. As a result, elderly helpers may struggle to find a suitable lender.

The good news is that well-presented applications can secure favourable deals with suitable lenders. Showcasing your income and income from those helping can give lenders confidence that the mortgage will be repaid on time each month. Larger deposits can also reduce the risk surrounding your application.

What alternatives are there for first-time buyers?

As a first-time buyer, there are many ways for you to get help when buying your first home.

If you have family or friends willing to help you, you may benefit from the following mortgage types:

  • Guarantor mortgage
  • Gifted deposit mortgage
  • Family mortgage

If you don’t have help, you can try the following government mortgage schemes:

  • Help to Buy
  • Shared ownership
  • Mortgage guarantee scheme

It’s important to understand that each scheme or mortgage arrangement has its pros and cons. You can speak to our experts to learn about which mortgage arrangement will suit you the most.

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About the author

Mortgage Advisor | More Articles

Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.