Getting a Joint Borrower Sole Proprietor Mortgage

Getting a Joint Borrower Sole Proprietor Mortgage

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Author: Carl Shave - CEO and co-founder
Last updated: 30 May 2024

What is a Joint Borrower, Sole Proprietor mortgage?

Joint Borrower, Sole Proprietor is an arrangement whereby not all parties named on the mortgage are the legal owners of the property. The scheme is sometimes referred to as a JBSP mortgage.

This arrangement allows other parties’ incomes to be used during the affordability assessment. That in turn can boost the level of money lent out, but the other parties will not actually own the property.

This arrangement works in a very similar way to a guarantor mortgage but differs in that the parties not being named as the owner of the property are just as responsible for the whole debt rather than simply guaranteeing the monthly payment. This is referred to as jointly and severally responsible.

Getting a Joint Borrower, Sole Proprietor mortgage

If you are applying for a JBSP mortgage, the income of up to four other people can be considered. The other supporting borrowers’ incomes are usually parents or close relatives. However, they can be friends too.

This allows you to borrow more, especially if you have a smaller deposit. For example:

If you make £18,000 per year a lender may be willing to lend you between 4.5 and 7 times your income. Therefore, the most you could borrow is £126,000 and the minimum being £81,000.

By using one of your parents who might make £30,000 a year, your combined income is now £48,000. Meaning you could potentially borrow over £200,000.

Affordability assessments are one of the critical elements of an application. They can frequently give the most disappointment when people investigate their options.

To overcome this lots of potential borrowers, look into a guarantor mortgage. However, fewer lenders now accept this scenario, leaving very limited options. This is why JBSP mortgages can be so effective.

Who can be named on a JBSP mortgage?

The most common request is for a parent or guardian to be used as the financial support. However, for many lenders this is not always the case. Many will accept any family member and indeed friends, giving no restrictions around the relationship.

Any parties named on the application solely for financial gain, need to understand that this commitment can have an impact on future borrowing. In all cases they will be required to obtain independent legal advice. It is also worth noting that more than two applicants can be named, however there will typically be a maximum of four.

Which banks offer Joint Borrower, Sole Proprietor mortgages?

As JBSP mortgages are growing in popularity, more and more lenders are releasing their version. Whilst there is a growing level of choice, the diversity of the criteria for each lender can be quite vast. And as such, where you may fit the bill for one, it cannot be assumed that you will for all.

Some of the more common JBSP mortgage lenders are:

  • Barclays Bank
  • Skipton Building Society
  • Bath Building Society
  • Metro Bank
  • Newcastle Building Society
  • Furness Building Society

The arrangements are relatively niche and as such it is not an area that even some of the biggest lenders currently participate in. We strongly recommend that if you feel this is something that may be suited to your individual situation, that you speak to a broker who should be best placed to know which lenders could be applicable.

What’s the criteria for a Joint Borrower, Sole Proprietor mortgage?

Although each lenders’ criteria will vary, we’ve listed a few of the key elements here:

  • The “main” borrower(s) must reside at the property.
  • The maximum term will be based on the eldest income-providing applicant.
  • Available on any repayment method i.e., repayment or interest only subject to an acceptable repayment strategy.
  • All non-proprietors must have independent legal advice.
  • Not available in conjunction with certain other lending schemes such as shared ownership.
  • Can be used to assist in the level of borrowing but not as a solution to obtaining a mortgage with a bad credit rating.

Joint Borrower, Sole Proprietor mortgage pros and cons

Pros Cons
  • It’s easier to get onto the property ladder.
  • Once your income grows, you can take full ownership.
  • Stamp duty doesn’t need to be paid for the additional borrowers/supporters.
  • Even though everyone is responsible for the payments, the homeowner has full ownership of the property’s equity.
  • The homeowner and supporters are all responsible for repayments.
  • Older supporting borrowers could limit the term.
  • Supporting borrowers with bad credit could negatively affect your application.
  • Lenders can potentially restrict who can live in the property.

 

What are the Joint Borrower, Sole Proprietor mortgage rates?

Interest rates apply the exact same way they do to a standard residential mortgage. Therefore, the rates will vary from lender to lender. And fluctuate depending on the current market.

However, finding the best deal for your circumstances isn’t always easy. So, using a mortgage broker or intermediary can make finding the right lender at the right rate easier.

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Carl Shave

CEO and co-founder

About the author

Carl Shave has been involved in the mortgage & finance industry since leaving education and is one of the co-founders of Just Mortgage Brokers. He has written guest posts and provided journalist comments for companies such as The Times, FT Adviser, Mortgage Strategy, Mortgage Solutions and others, demonstrating his extensive industry knowledge.

JBSP Mortgage FAQs

There is no set age limit that JBSP mortgage lenders impose. Although, the oldest supporting borrower will usually need to be no older than 70. However, some lenders will extend this up to and over the age of 80.

Applying for a JBSP mortgage with bad credit can make getting approved more difficult. However, you will be pleased to know that there are specialist lenders available that will look past your previous credit history.

They aren’t always directly accessible to individuals, so you may need to use a broker or intermediary to access them.

If you are looking to end the term, there are a few options available to you. If a supporting borrower wants to remove their name, you will most likely need a deed of release.

This would only be allowed if the homeowner can prove that they can continue to make mortgage payments without any financial support.

Remortgage after a few years is a more common thing for people to do. If you can now afford monthly mortgage payments, then you can look for a different type of agreement. This will give you full ownership and responsibility.

Finally, you could sell the property and fully pay off the mortgage, therefore ending the agreement.