Joint borrower sole proprietor mortgages
A joint borrower sole proprietor mortgage could help you borrow more with the help of family or friends - here’s how they work.
What is a joint borrower sole proprietor mortgage?
A joint borrower sole proprietor mortgage (JBSP) is a mortgage that you take out with another person, usually a parent or close family member.
The big difference from a regular joint mortgage is that only you will own the property, but the other party will share the responsibility for the mortgage repayments.
JBSP mortgages are often used by parents or guardians who want to help their children get onto the property ladder. The risk to the lender is lowered because all the borrowers are responsible for making the repayments, making it easier for those struggling to buy their first home.
How do joint borrower sole proprietor mortgages work?
JBSP mortgages work in the same way as any other mortgage in most aspects. All applicants must meet the lender’s eligibility criteria and show they can afford the mortgage payments.
The main difference is that only one of the borrowers (known as the proprietor) is named on the property’s title deeds. This means that the other borrowers will hold no legal claim to the property or any increase in its value, even though they are jointly responsible for repaying the mortgage.
Including the other applicant’s income when assessing the mortgage gives first-time buyers a much better chance of getting onto the property ladder. Most lenders require the proprietor to reside in the property as part of the mortgage terms.
At the end of the initial mortgage deal, you can switch to a mortgage in your sole name if you can afford to make the mortgage payments on your own.
Who offers JBSP mortgages?
Not all lenders offer JBSP mortgages; however, there are several that do. Examples of mortgage providers currently offering joint borrower sole proprietor mortgages include:
Barclays Bank
Skipton Building Society
Bath Building Society
Newcastle Building Society
Family Building Society
Principality Building Society
Metro Bank
Several other smaller lenders and building societies can offer JBSP products, so it’s worth looking around. A mortgage broker can search the market to help find the right lender and mortgage product for your situation.
How much can I borrow with a JBSP mortgage?
How much you can borrow will be based on all of the mortgage applicants' incomes and affordability.
Most lenders will be prepared to lend you around 4 or 4.5 times your joint income. That means if your income is £30,000, and you’re applying with a parent who earns £40,000, you could borrow £280,000 (£70,000 x 4).
That means you could borrow £160,000 more using a JBSP mortgage compared to applying on your own.
Mortgage lenders also look at your affordability when deciding what they can lend to you. This includes looking into all of your incomings and outgoings and performing a hard check on your credit record.
A joint mortgage calculator can give you a good idea of what you might be able to borrow with a joint borrower sole proprietor mortgage.
Is a JBSP mortgage a good idea?
Joint borrower sole proprietor mortgages are an attractive way for a family or friends to help you get onto the property ladder. However, there are advantages and disadvantages that both you and the other borrowers should be aware of before you apply for a JBSP mortgage.
Pros and cons of JBSP mortgages
Pros of JBSP mortgages
Borrow more
It can help you borrow more than applying on your own.
Take over the mortgage
You can take over the mortgage on your own when you can afford to.
Stamp duty
There is no stamp duty liability for the supporting borrowers.
Access better rates
You can more easily access preferential rates and deals.
No security needed
Family can help without using their home as security.
Cons of JBSP mortgages
Equal responsibility
All borrowers share an equal responsibility for making repayments.
Government schemes
You can’t use it with other government schemes for first-time buyers.
Age limits
Age limits could make it difficult for older family members to help.
Credit checks
All borrowers need to meet the lender’s criteria and pass credit checks.
Ownership rights
Not everyone has ownership rights, even though they’re responsible for keeping up with the repayments.
What are the alternatives to JBSP mortgages?
There are several ways that family or friends can help support you to get onto the property ladder or buy a new home, including:
With a guarantor mortgage, your family member agrees to repay your loan if you cannot. They will usually be required to use their home or another valuable asset as security for the mortgage.
They are very similar to a JBSP mortgage; however, for a guarantor mortgage, the supporting family member is only liable for the mortgage payments if you’re unable to keep up with them.
Springboard mortgages are very similar to guarantor mortgages. A friend or family member uses their savings as a deposit for your mortgage, but the money is held in a savings account rather than go towards the purchase.
At the end of a set period, usually three or five years, they get the money back with interest. The money is there as a safety net in case you are unable to keep up with the repayments. If this happens, the lender can hold onto the savings for longer or use the money to cover the payments.
This is where a close relative or loved one provides the deposit for your purchase, allowing you to buy a home. If the deposit is gifted, it means it won’t need to be paid back, but you could agree to repay the deposit privately.
When you provide a deposit for a house purchase, the mortgage lender may ask where the funds have come from. That means the family member may need to provide documented evidence of the gift and confirmation that it doesn’t need to be repaid.
Our expert says...
“Joint borrower sole proprietor mortgages are a great way to help those struggling to get a mortgage to buy their first home - but all borrowers must understand the risks.
”Speaking to one of our expert advisors can help you understand exactly what a JBSP mortgage means for you. They can also search the market to help you find the right deal.”
Joint borrower sole proprietor mortgages FAQs
The proprietor is the only legal owner of the property with a JBSP mortgage. Their name alone will appear on the title deeds, and the other borrowers will hold no legal rights to the property, including any increase in value.
Stamp duty is still applicable; however, the liability only applies to the proprietors. This is a big advantage of JBSP mortgage, as it means you can take advantage of first-time buyer stamp duty rates, even if the supporting borrowers are already homeowners.
The main difference is that not all the borrowers are owners of the property when you take out a JBSP. With a joint mortgage, all borrowers will be listed on the title deeds and will be liable to pay stamp duty.
As a supporting borrower on a JBSP mortgage, you will have no legal claim to the property but will share the responsibility of repaying the loan.
Most lenders will accept four applicants and consider all four incomes when assessing the application. Usually, only one applicant is considered the proprietor of the property.
Yes, you will still need to provide a deposit to get a joint borrower sole proprietor mortgage. How much deposit you need will depend on the lender, but some will accept as little as 5% of the purchase price.
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