Joint Borrower, Sole proprietor (JBSP mortgage)

Joint Borrower, Sole Proprietor mortgage (jbsp mortgages) is a type of mortgage where not all parties to the mortgage are legal owners of the property. For instance, where there are two borrowers on the mortgage, but only one will be the legal owner and named on the title of the property. Joint Borrower, Sole Proprietor mortgage is different to a joint mortgage. In joint mortgages, all customers are responsible for the mortgage and legally own the property.

The main purpose of a joint borrower, sole proprietor mortgage is to help with affordability. By combining your incomes you can take out a larger mortgage than you would be able to obtain otherwise, without giving away any of your equity or having a person named on your deeds or legal ownership, which could affect the non proprietors stamp duty liability if they were named on the deeds

How does it work?

The joint borrower is usually a family member (typically a parent) or close friend. Only the buyer/buyers will solely own the property (the "sole proprietor"), but your loved ones who are helping will be on the mortgage as a "joint borrower", which means they will be liable to pay the mortgage if you cannot. A joint borrower sole proprietor mortgage is an ideal choice for those on a lower income who want to get onto the property ladder sooner. This type of mortgage allows them access to properties that they would otherwise not be able to afford alone.

As non proprietor is legally responsible for the monthly repayments and does not own any rights to the property they would need to seek independent legal advice to ensure they fully understand the implications involved. These will come with additional costs and usually can't be the same legal representative as the sole proprietor.

Stamp duty may be payable on your new property, however, this is only payable by the legal owners, the non proprietor would not be liable for stamp duty, as they do not legally own the property.

A JBSP mortgage is intended to be a temporary support for buyers as they are getting onto the property ladder. When the buyer's circumstances change (i.e. they get a salary increase), the joint borrowers could come off the mortgage. This will be subject to affordability and passing further credit checks.

Pros and Cons of joint borrower, sole proprietor mortgages

A Joint Borrower, Sole Proprietor mortgage (jbsp mortgage) have both advantages and disadvantages.

The main benefits are:

• Easier for first-time buyers to get a mortgage
• Borrow more than you would be able to alone
• You can potentially get on the property ladder sooner
• Maintain sole ownership while sharing liability
• No additional stamp duty for those helping

The main disadvantages are:

• The non proprietor has no legal claim to the property
• Additional legal fees are payable
• It will affect all parties' credit history.
• If either one of you stops paying your share of the mortgage repayments, the other one will be responsible
• Not many lenders are available

Mortgage repayments

All parties of the mortgage are equally responsible for the mortgage payments. The mortgage debt will also appear on all party's credit profiles. The downside to this is it can affect the future credit of the non proprietor. It can also affect the affordability of any future mortgages. Typically the monthly repayments are paid by the sole proprietor, however, the non proprietor also has joint responsibility for these payments. Therefore any missed/ late payments will appear on all customer's credit profiles.

Mortgage lenders

Joint borrower sole proprietor mortgages are quite specialist mortgages, which means they’re not offered by that many lenders. Each lender will have its own criteria and legal requirements, therefore it is always best to check before completing a mortgage application.

How to apply for a JBSP mortgage

To assist you in selecting the appropriate lender, we suggest speaking to a ‘whole-of-market’ mortgage broker. Not only can they compare all the deals available from lots of different lenders, but they’ll also be able to fill out the whole application for you and guide you along every step of the way.

LTC Mortgages are independent 'whole of market' advisers who can help you through the process of joint borrower, sole proprietor, Contact us at [email protected] or call us on 0151 662 0188.