Getting on the property ladder can be a challenge, especially for first-time buyers. But joint borrower sole proprietor (JBSP) mortgages offer a path forward. With a JBSP mortgage, your family can assist you with mortgage payments without needing to be on the property title. If you’re eager to move from renting to owning your own home but need some extra financial support, a JBSP mortgage could be the ideal solution. This guide will explain what JBSP mortgages are, how they work, and their benefits for first-time buyers or those with lower incomes. We’ll also briefly cover joint mortgages and how JBSP mortgages differ.
A JBSP mortgage is an abbreviated version of a joint borrower sole proprietor mortgage, which exists to allow a parent or family member to help pay their children’s mortgage but without being a co-owner of the property. A JBSP is a great way for young people to buy their first home and get on the property ladder, as it ticks lots of boxes for first-time buyers.
In this guide, we will tell you all you need to know about having a joint mortgage and how it can be useful to you if you are a first-time buyer or somebody who is on a low salary.
Get in touch after reading if you would like to know more and a mortgage advisor at YesCanDo Money will give you further information about this specialist mortgage.
Curious about other ways to share mortgage responsibilities? Learn how you can add someone to a mortgage.
What Is A Joint Borrower Sole Proprietor Mortgage?
The average UK house price is often higher than what many first-time buyers can afford so getting on the property ladder can be made difficult. Thankfully, there are a number of ways to buy a house, even when the income required mortgage is lower than your income.
One option is a JBSP mortgage which allows the buyer to purchase a property with the help of up to 3 other people, typically a parent and other family members, who agree to put their names down on the mortgage application.
With more than one person on the application form, there will be more than one salary for the mortgage lender to consider. As such, the chances of mortgage approval are increased so there is potential for the buyer to move into their own property sooner.
This isn’t the only option for somebody unable to get a mortgage alone. A guarantor mortgage is another way for a family member to help somebody get on the property ladder so is also worth considering.
Talk to a member of our team to understand more about the differences between a guarantor mortgage, a JBSP mortgage, and a normal mortgage.
We have over 40 years of experience and expertise in helping to work out the logistics of how to structure a joint borrower sole proprietor mortgage. The observation from our mortgage advisors is that a clear understanding is needed from all parties involved to reduce any issues and problems that might arise during the mortgage term. – Stephen Roberts
How Do Joint Borrower Sole Proprietor Mortgages Work?
If you’re worried about your mortgage affordability, a JBSP mortgage could be right for you.
This type of mortgage allows for up to four applicants who each agree to be responsible for the mortgage payments. One of these applicants would be you and the others could be your friends, your parents, or any of your other family members.
Who has legal ownership of the property?
The people on your joint borrower sole proprietor mortgage application won’t be moving into your home with you as you will be the only one registered as the legal owner of the property.
Therefore, you will have sole ownership of your home as the people on your mortgage application won’t be named on the title deeds and so won’t have any legal ownership of the property.
Of course, you might still want to invite the people on your joint mortgage around for dinner occasionally, as a way of saying thank you to them for helping you get a mortgage.
Why would somebody help me with my mortgage?
JBSP mortgages are usually taken out by those who want to get on the property ladder or who don’t have the level of income needed to buy a house at a higher property value.
The people who agree to help you with your mortgage will usually be those that want to help you get your own home.
These will normally be the people who love and care for you and who are willing to accept joint responsibility for making the monthly mortgage payments.
As we mentioned, these people could be your family members or your friends who want to support your move into a residential property.
Can my mortgage application still be rejected?
With up to four people on the mortgage application, your chances of being approved for a mortgage will be increased.
However, the people on the application still need to meet the mortgage lender’s criteria. As with a standard mortgage application, these criteria will be based on credit history, level of income, minimum and maximum age, and other factors.
If the joint applicants don’t meet the maximum age limit, or if their credit risk is poor and their income is low, your application can still be rejected.
As such, you should think carefully about which friend or family member you approach when applying for a JBSP mortgage.
How Do Joint Borrower Sole Proprietor Mortgages Differ From Regular Joint Mortgages?
Each person is named on the title deeds so it is classified as shared ownership.
With a joint borrower sole proprietor mortgage, only the homeowner will have legal responsibility for the property.
The other people on the application will still be responsible for making the monthly mortgage repayments (unless the sole owner is able to cover these themselves) but as there is no shared ownership, they won’t be on the title deeds.
5 Joint Borrower Sole Proprietor Mortgage Pros
A joint-borrower-sole-proprietor mortgage can be very beneficial. Advantages include:
1. The opportunity to get a larger mortgage
With a JBSP mortgage, you may be able to borrow more money than you would if you were applying for a mortgage alone. As such, you may be able to purchase a more expensive property as you would be better able to meet your monthly mortgage repayments.
2. An easy way onto the property ladder
If you’re struggling to get on the property ladder because your level of income isn’t sufficient, you may find more success with a JBSP mortgage.
3. A wider range of mortgages
As other people will be adding their financial credentials to the mortgage application, you may be able to access better mortgage deals, with lower loan-to-value ratios and reduced interest rates.
4. Exemption from Stamp Duty and capital gains tax
With a JBSP mortgage, the other parties don’t have to pay the 3% Stamp Duty surcharge or capital gains tax. That will certainly be good news for them and as you can qualify for Stamp Duty exemption if you’re a first-time buyer, it will be good news for you too!
5. A mortgage with a low credit score
Typically, people with a bad credit history struggle to get a mortgage. This isn’t always the case as there are specialist lenders who will accept a mortgage application. But on the high street, many mortgage lenders are likely to turn applicants down as they may be worried about their ability to make their mortgage repayments on time.
With a JBSP mortgage, however, you have the opportunity to get a mortgage, even if your credit score is low, provided the other parties on the application are considered ‘credit-worthy’ by the mortgage lender.
3 Joint Borrower Sole Proprietor Mortgage Cons
The benefits of a JBSP mortgage are clear. However, there are disadvantages. These include:
1. Financial risks for the joint borrowers
Despite being a non-legal owner of the property, the other parties are still responsible for the mortgage payments and mortgage debt. They don’t have to make these if you can cover them alone but they have the option of supporting you with these if they are willing.
However, if you were to default on your payments, the liability for the shortfall would fall on the other borrowers, even if they weren’t making contributions earlier. They need to be aware of this before agreeing to be on the application. If they aren’t able to contribute, their credit score would be negatively affected and this could damage their chances of future borrowing.
2. It’s not easy to be removed from the mortgage
If somebody wanted to remove themselves from the mortgage agreement, the process isn’t straightforward.
The other parties can be removed from the agreement with a deed of release. However, this would only be granted if you had the ability to afford the mortgage debt alone. If this wasn’t the case, you would either have to remortgage or sell your property to release them from the mortgage. It could be wise to get independent legal advice.
If you didn’t want to go down either of these routes, the non-legal owner would have two choices. They could begin a costly legal battle to force you to sell or they could remain on the agreement. If they did make a legal claim against you, you would need to obtain independent legal advice of your own, which could prove expensive.
3. The joint borrowers might struggle to get buy another house
If one of the parties on the joint borrower sole proprietor mortgage wanted to buy a property of their own, their borrowing chances could be decreased because of their participation on your mortgage.
They would have to convince the mortgage lender of their ability to make monthly repayments on two mortgages, which may be a problem if they don’t have sufficient funds in place.
Joint Borrower Sole Proprietor Mortgage FAQs
Most lenders will accept a married couple for a joint borrower sole proprietor mortgage. However, only one member of the couple would be named on the property deeds. If both parties wanted to be on the deeds for the duration of the mortgage term, a joint mortgage is the better option.
First-time buyers qualify for Stamp Duty relief if they buy a property for less than £500,000.
However, if you were to get a joint mortgage with a parent or a family member that owns or has owned a home, you wouldn’t qualify for this exemption. Worse still, if they do own a home, you and the other party would need to pay 3% Stamp Duty on top of the standard rate as your property would count as a second home.
This isn’t the case with a JBSP mortgage. If you opt for this type of mortgage, you will be exempt from paying Stamp Duty as the supporting parties wouldn’t be named on the property deeds.
Before taking out a joint borrower sole proprietor mortgage, you and the other parties should take legal advice. Most lenders will insist that you all do this anyway as you will all need to be aware of your financial obligations.
After doing this, you should look at those lenders that offer JBSP mortgages.
As there aren’t a huge number of mortgage providers offering JBSP mortgages, it’s advisable to speak to a mortgage broker, such as ourselves, for help with your search.
A mortgage broker will give you advice related to this type of mortgage and they will search the market for the lenders and mortgage deals that are right for somebody in your circumstances.
When a lender has been found, the application can be made. If everybody meets the lender’s criteria, you should receive a mortgage offer.
There are a few mainstream lenders that currently offer JBSP mortgages, and these include:
Furness Building Society
Newcastle Building Society
Skipton Building Society
Norton Home Loans
This list is not exhaustive as there are other lenders out there that offer JBSP mortgages, including specialist lenders that are not found on the high street.
As lending criteria can vary between different mortgage providers, you should speak to an independent mortgage broker to find out which mortgage lender is right for you.
How YesCanDo Money Can Help
JBSP mortgages are a great option if you’re struggling to get a mortgage on your own. With the combined income of several applicants, there will be less risk to the mortgage lender if you have a joint mortgage with a joint borrower, as you will have a better chance of making your mortgage repayments over the mortgage term.
If you are interested in knowing more about a joint mortgage, get in touch with our expert team. We will get to know you and any supporting borrowers and will advise you on the best way forwards.
We will explore all of your options
Should we think a JBSP mortgage is right for you, we will search the market for the best mortgage deal and will support you with your mortgage application.
We will also discuss your other options, such as guarantor mortgages, which we mentioned earlier.
Standard sole-applicant mortgages are another possibility if making mortgage payments won’t be a problem for you. More mortgage lenders offer these so you will have a wider choice of mortgages.
However, if you are worried about being a sole mortgage owner, we have access to a wide range of lenders that do offer guarantor mortgages and JSBP mortgages, so your options won’t be limited.
Get in touch with our team if you have any questions and we will provide the answers you need.
For more information, you should also check out our other mortgage advice guides as we cover a wide range of topics that could prove useful to you.