Joint Borrower Sole Proprietor Mortgage

Joint Borrower, Sole Proprietor Mortgage

A Joint Borrower Sole Proprietor Mortgage (JBSP) allows you to add applicants to your mortgage, to help increase affordability, without having to add them onto the deeds of the property. The lender will take the income from all applicants into account when deciding how much they are willing to let you borrow, but only the people living in the property are on the title deeds, making them the sole owners.

What are the main advantages of a JBSP mortgage?

A JBSP mortgage can allow you to gain access to a larger mortgage than if you were looking to apply on your own. This is because it allows you to combine your income with that of other people in order to increase your borrowing capacity. It may also make qualifying for a mortgage easier if you have a less than perfect credit profile as the lender will be assessing the combined financial strength of all borrowers.

It can be particularly useful if you are in a career where you expect your income to increase and you just need an initial boost to make your mortgage affordable, or if you are first-time buyers whose parents would like to support you in becoming a homeowner.

JBSP mortgages may also offer more favourable terms such as accepting a lower deposit or offering lower interest rates, due the fact that some lenders consider these kind of mortgages lower risk.

What are the disadvantages of JBSP mortgages?

There is a limited number of lenders who offer JBPS mortgage products so your options may be restricted.

The non-legal owners who are on the mortgage are financially responsible for the mortgage and would be legally responsible for mortgage repayments, if the legal owner stopped making payments. This exposes them to risks without any financial benefit. They also may have limited control over decisions relating the property and this can lead to conflicts.

If one borrower wishes to sell their share or there are changes in relationships, it can be very difficult for the non-legal owner to have their name removed from the mortgage.

The application process for a JBSP mortgage can by more complicated than when you apply on your own due to the fact that additional verification and income checks are required for the additional borrowers on the mortgage.

How do I know if I’m eligible for a JBSP?

Anyone can be eligible for this type of mortgage. In most instances, parents would normally be party to the mortgage. However, in some circumstances, lenders may permit other close relatives or friends to be on the mortgage with you.

How do I apply for a JBSP Mortgage?

Just like with any mortgage application, all parties to the mortgage would go through the mortgage application process. All borrowers would have to pass the usual credit checks, provide any relevant documentation and undergo affordability assessments. A mortgage adviser can help guide you through the process.

ow is a JBSP Mortgage different to a Guarantor Mortgage?

With a guarantor mortgage, someone- usually a parent , relative or even a close friend, sign to agree to cover your mortgage payment if you can’t pay them for any reason. Usually, it involves the guarantor using their home or savings as ‘security’. It reduced the risk for the lender by ensuring that they won’t be out of pocket if you fail to meet the monthly payments. A guarantor mortgage can may allow you to borrow up to 100% of the property’s value meaning you don’t need to save for as big a deposit. It doesn’t normally however, allow you to borrow more as the guarantor’s income isn’t used towards your affordability.

Can I get a JBSP Mortgage with bad credit?

There is a limited number of lenders who offer JBSP mortgages and if you have bad credit, the number of lenders we can approach is limited even further. Whether or not you qualify, will be largely determined to the extent of your bad credit. If you have CCJs, defaults or debt management plans, your chances will be very slim in comparison to having simply missed one payment. It’s always worth getting a copy of your credit report and letting us to see the extent of your bad credit, as this will enable us to determine whether or not you’ll be eligible.

My parents already own a home. If they come on my mortgage, will they have to pay Stamp Duty Land Tax (SDLT)?

Any additional borrowers won’t be liable to pay SDLT, even if they own another property, as their names won’t be registered on the title deeds for the property and they won’t be legal owners.

What else should I consider before applying for JBSP?

Whilst a JBSP Mortgage may be a great way to help you get onto the property ladder, you should consider the following:

• Always seek legal advice to ensure all parties to the mortgage understand their right and responsibilities and the legal implication.

• Ensure that all parties to the mortgage are financially stable and establish clear terms for sharing mortgage repayments prior to taking out the loan.

• Ensure that you have a clear exit strategy for the joint borrowers who are not on the property deeds for when it comes to selling the property or refinancing.

• Ensure that you have appropriate insurance in place to protect all borrowers financially in case of unexpected events.

If you are worried about getting on the property ladders due to property process being too high or your income not quite stretching far enough. A JBSP mortgage can be a great way of getting on the property ladder. We can help you navigate the mortgage application process and explain all the ins and outs to each party to the mortgage, we’re here to support you every