Joint Borrower Sole Proprietor Mortgage

What is a Joint Borrower Sole Proprietor mortgage and how do they work?

A Joint Borrower Sole Proprietor or JBSP mortgage allows two or more people to buy a property together, with just one person taking ownership of that property. 

These mortgages can be really useful for parents or family members who want to help someone buy a home, but without owning that property. They are a new alternative to a guarantor mortgage. 

What criteria do you need to meet for a JBSP mortgage? Who is eligible for one?

To a certain degree, anyone is eligible for them. A lot of the Joint Borrower Sole Proprietor mortgages we’ve done in the past have been for First Time Buyers looking to buy their first property. Usually there is an affordability gap between the type of property that they can afford on their incomes and the property they want to buy. That’s where your family member or friend can help you out. 

Lenders will look at your income and expenditure for both parties – the buyer and the helper – and basically determine what they’re willing to offer you based on those circumstances. 

There’s more to take into account, because the likelihood is that the parent, family member or friend owns a home and has a mortgage. They will have their own expenditure, and that will be taken into account for that person. 

Do you pay stamp duty on a JBSP mortgage?

Yes, normal stamp duty rules apply. The buyer will pay the standard stamp duty as a first time buyer or a home mover. 

But the reason why a Joint Borrower Sole Proprietor mortgage is popular is that there is a second property stamp duty tax. These mortgages are a way around the additional 3% charge on a second property. 

If your parent already owns a property, because they’re not going onto the mortgage deeds, you won’t have to pay the additional stamp duty tax.

Can you have a sole mortgage on a joint property?

Yes, you can. It’s where the person buying the property with you is legally named on the property but not on the mortgage paperwork. They have no legal responsibility to pay the mortgage but the home is still at risk if you are unable to make your payments.

What’s the difference between a joint mortgage and a JBSP mortgage?

With a joint mortgage you legally own the property together. You can choose how you own that property but there will be a percentage that you own. 

My wife and I have a joint mortgage together and we own the property 50-50. We have joint responsibility for that mortgage. With a Joint Borrower Sole Proprietor mortgage, that isn’t the case. 

Potentially, if I used that mortgage myself and my wife was helping with the affordability on it, I would have legal responsibility for that property. She wouldn’t. That’s the difference – the legal ownership of the property.

What’s the difference between a guarantor mortgage and a Joint Borrower Sole Proprietor mortgage?

We have recorded a separate podcast on guarantor mortgages, so have a listen to that. 

There’s not much difference between the two. In the past, guarantor mortgages used some security in the background to help, such as the guarantor’s property or savings. 

With Joint Borrower Sole Proprietor the affordability is looked at for both people – your expenditure and income. There’s not a massive difference between the two types. Generally guarantors aren’t on the mortgage deeds anyway – and that’s the big thing about the Joint Borrower Sole Proprietor mortgage.

Can I get a Joint Borrower Sole Proprietor mortgage with bad credit?

As with any mortgage, every lender will have their own way of looking at bad credit and what they will accept. Some will accept a certain element of bad credit, while others won’t. 

It does become a little bit more restrictive if you have got bad credit. We would always recommend speaking to a broker, because we’ll know which lenders to approach and what they can do for you. 

As long as there is a lender that will accept your bad credit and has the product available, we should be able to get you a Joint Borrower Sole Proprietor deal.