Joint Borrower Sole Proprietor

What is a JBSP mortgage and how do they work?

It’s as it sounds. JBSP stands for Joint Borrower, Sole Proprietor, which basically means that only one of the applicants needs to go on to the property deeds. The other applicants would be on the mortgage but not on the deeds.

It’s similar to a guarantor mortgage, as it helps the applicant reach an affordability level they wouldn’t otherwise have achieved. Often there’s one proprietor on the deeds for the property, and most lenders allow just one other joint borrower. A couple of lenders will allow up to three additional borrowers, however.

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

Anyone’s eligible for it. You just need an income of some sort, whether it’s employed, self-employed or other income, like benefits. Not every lender accepts benefit income, though.

It would be better if your credit score was towards the top end, with not many issues on it, because only a small selection of lenders offer JBSP mortgages. So, you’ll need an income and a fairly good credit file.

Do you pay stamp duty on a JBSP mortgage?

As brokers, we’re not allowed to advise on tax, but you do get stamp duty allowances as a First Time Buyer.

And if the joint borrower already owns a property, this would not affect the First Time Buyer with a JBSP mortgage – because the joint borrower is not going on the title of the property. They’re only on the mortgage.

JBSP mortgages do benefit people in that way and make things more possible.

Can you have a sole mortgage on a joint property?

No, you can’t have it the other way around, where more than one person owns a property and are named on the title deeds, but only one goes on the mortgage. If you’re on the deeds, you have to go on the mortgage.

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

A joint mortgage is just a normal mortgage between two applicants, or sometimes up to four, where they’re all going on the title deeds. That’s a standard mortgage. But with a JBSP mortgage, one or more of the joint borrowers are not named on the deeds.

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

With a JBSP mortgage, all parties are jointly and severally liable for the mortgage payments. With a guarantor mortgage, that other person is only liable for those payments if you can’t make them.

With both scenarios, the other person is not legally tied to the property and or has no legal rights over it.

Can I get a JBSP mortgage with bad credit?

If any client comes to me and they have bad credit, we have to look into things a lot deeper. We look over the credit file to ascertain what issues there are, or have been in the past. We’ll then check this against the lender’s criteria.

As I mentioned, not all lenders do JBSP, so we’d have to narrow the search down. But it is possible, depending on how bad that credit is.

How does remortgaging a JBSP mortgage work?

If you’re in a fixed period, in the same way as on a standard mortgage, we’d contact you around six months before it ends. We’ll ensure you don’t go on to that lender’s standard variable rate.

We would assess your current circumstances. Maybe your income has improved and you don’t need to use the joint borrowers on the mortgage now. Maybe you only need one of them, and not the two you originally went with.

Perhaps your credit situation has changed. We’d look at the whole picture – as with any remortgage. Based on the findings of everything we would then identify the most suitable product available to you. We would recommend that one and if you’re happy, we will apply as normal.

What are the pros and cons of JBSP mortgages?

The main positives here are that it really helps people get onto the property ladder. Sometimes it’s the other way around, where instead of parents helping their children buy a home, a son or daughter is helping their parents.

They might be buying a home a bit later in life, or trying to remortgage. Maybe they have split up from their partner and their income isn’t enough to remortgage their current property on their own, so they need to add their son or daughter to boost the total income.

The disadvantage to this type of scheme is that if the person helping you needs to buy or remortgage their own property, the JBSP mortgage is still seen as a commitment. It would hugely affect affordability on their own property – ultimately it’s another mortgage on their credit file.

We could obviously discuss all these things in more detail with you. You do have to be very careful and get advice from a broker. So just contact us here and we can guide you through.

What else do we need to know about a JBSP mortgage?

Every situation is different. It might be a young person buying a home or someone’s parents. You could be helped by a friend – sometimes lenders are okay with that. But overall it’s the same as a normal property purchase.

You just contact us initially and find out what your maximum borrowing amount is. You’d then know what value of property to look at. Then, when you find something that you like, you put an offer in, it’s accepted and we carry on with the process. We’re here to hold your hand all the way to completion – the day you move in.

YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR PROPERTY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

HM Revenue and Customs practice and the laws relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.