What is a Joint Borrower, Sole Proprietor Mortgage?

A JBSP (joint borrower, sole proprietor) mortgage is a product which is designed so parents, guardians or others can help you get onto the property ladder.

Ordinarily help with a mortgage would take the form of a large sum of cash to help with a deposit. Joint borrower, sole proprietor mortgages take on a different approach.

How do join borrower, sole proprietor mortgages work?

Usually to get help from a parent you would need to ask them to part with a considerable amount of cash to help you bolster your deposit and increase your buying power.

Conversely, JBSP mortgages allow a parent or guardian to join you on the mortgage application. This way, their income will be considered when the lender calculates how much they will lend you.

This is where the term ‘joint borrower’ comes from. All names on the mortgage will be equally responsible for keeping up repayments on the mortgage loan.

What does ‘sole proprietor’ mean?

What makes these types of mortgage different is that whilst the mortgage may have two applicants, (say mother and son) only the son would be seen as a proprietor of the property. This means that the property would be only in his name and his mother would have no claim over the property.

What are the benefits of JBSP mortgages?

The main benefit of a JBSP mortgage is that it will help someone buy a property that they otherwise wouldn’t have been able to afford. It does this without the need for large deposit gifts from family.

Secondly, by organising a mortgage this way, the primary applicant wouldn’t lose their First-Time Buyer status and therefore the purchase will not be subject to Stamp Duty Land Tax or the increased Stamp Duty which is required when purchasing a second home or investment property.

What are the drawbacks of a joint borrower, sole proprietor mortgage?

If the relationship between the two borrowers break down, it could prove difficult for the non-legal owner to have their name removed from the mortgage.

As above, the non-legal owner is also legally liable to pay the mortgage repayments. This is the case even though they have no legal right over the property and don’t stand to benefit from any financial gain which it may make.

By joining someone on a mortgage you also create a financial link between the two of you. Should the legal owner default on the mortgage then this will also negatively effect the non-legal owner.

They are a niche product and you will most likely need the expertise of an expert mortgage broker in order to obtain one.

Looking for First Time Buyer mortgages? Then look here.

How much can I borrow with a JBSP mortgage?

This depends entirely on your current financial situation and the income of all parties who are going to be on the mortgage application.

The benefit to the affordability is that the non-legal owners income would be used to calculate how much money they may be happy to lend you. So, if a parent wants to help their child with this type of mortgage and earns £30,000 per annum then the lender would take the £30,000 in to account and conclude that a higher level of mortgage loan could be offered.

Are there any additional steps?

Yes, the lender will also want to check over the non-legal owners financial situation. They should expect the same checks as the legal owner. This means that they should be willing to share their bank accounts, pay slips and other means of evidence with the lender.

As you’ve learned, the non-legal owner is going to have no claim over the property. For this reason, the lender is likely to insist that they speak to a solicitor and get independent legal advice before they commit to the loan. They will likely request that a disclosure is signed by the non-legal owner and seen by the underwriter before they sign off your mortgage offer.

How do I get started?

To begin with, you will need to speak to one of our mortgage experts. They will be able to start mortgage calculations for you right away. If you are specifically looking for joint borrower, sole proprietor mortgages because you’ve not had luck elsewhere, then it is important that the person who is applying with you joins you on the call. You can fill in the form below, or visit our contact page and find another way to get in touch.