What is a joint borrower sole proprietor mortgage and how do they work?
A JBSP mortgage allows multiple applicants to be responsible for repayments, even though only one owns the property. This means there will only be one person listed as the legal property owner, known as the ‘proprietor’. Although, if a mortgage payment is missed, it will affect everyone’s credit, not just the proprietor’s.
The reason for this structure is to combine the incomes of multiple applicants, which can improve your chances of being accepted, as well as increasing your borrowing capacity. This can be especially beneficial if you are a first-time buyer who may not meet, or struggle to meet, a lender’s affordability requirements by yourself.
Keep in mind that a JBSP mortgage can have up to four applicants, but only one – the proprietor – will be named on the property’s title deed as the legal owner.
When you might use a JBSP mortgage
Could you qualify?
Knowing what lenders require can improve your chances of JBSP mortgage approval. It will help you put yourself in the best position to be accepted for a mortgage product.
While every lender is slightly different, the below highlights the areas that lenders will look at and what they require from you when applying for a JBSP mortgage.
Mortgage affordability
When assessing an application, the lender will look at the income of all applicants and combine them in order to determine the affordability. They will also look at each person’s monthly expenses to ensure that no-one has a high debt-to-income ratio.
A range of factors like credit score and deposit size will all play a part in how much a lender allows you to borrow. A strong credit history and a larger deposit improve your chances of approval.
Try our free mortgage affordability calculator to understand your borrowing capabilities with and without someone supporting your application.
Deposit amount and loan-to-value
Deposit requirements for JBSP mortgages are the same as any other residential mortgage. Therefore, you may be able to provide just 5% of the total property’s value. However, you will open up your options if you can provide something closer to 10% or 15%. This way, you also increase your chances of obtaining a more favourable product with a lower interest rate.
Credit expectations
While lenders don’t require each applicant to have a certain credit score to apply, if one individual has struggled with their credit in the past, it can affect your chances. If an applicant does have bad credit it isn’t impossible to get a mortgage, however your options will be very limited.
To put yourself in the best position, we recommend speaking to a mortgage broker to determine your chances.
Age requirements
Many lenders will have maximum age requirements for all applicants of a JBSP mortgage. Each lender will vary, although the structure of their needs will be similar.
As a reference, Barclays state that: “the maximum age at the end of the mortgage term cannot exceed the oldest applicant’s 80th birthday.”[1] Therefore, if you were applying with one of your parents and they were aged 60 for example, you wouldn't be able to get a mortgage term of 25 years, as they would be 85 at the end of it.
In another situation, if a JBSP mortgage is being used to help elderly parents, then their age can sometimes be ignored if the elderly parents income is not being used to support the application.
Pros and cons of joint borrower sole proprietor mortgages
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Which banks offer joint borrower sole proprietor mortgages?
Joint borrower sole proprietor mortgages can be a complex area, with various options depending on individual circumstances. To ensure you make the right choice, it's highly recommended to speak to an expert who can guide you through the process and help you understand the best options available.
What interest rates to expect
Because mortgage rates change so frequently and depend on individual financial situations, providing exact JBSP mortgage rates is difficult. Generally, JBSP mortgage rates are the same as standard mortgage rates.
However, factors like credit history and deposit size can influence the final rate offered by lenders. This is because a lender might increase the rate they offer you if they perceive you as a ‘risky borrower’.
To get an accurate idea of what rate you might be offered, we recommend speaking to one of our expert brokers who will be able to review your circumstances just like a lender would.
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How do you get a JBSP mortgage?
1. Speak to a mortgage broker
We will be able to review each applicant’s situation and advise you on your next steps. We will look at things like each applicant’s credit history, monthly income and expenses, just like a lender would. Remember, be as accurate as possible when providing information. Then, if we think you have a good chance of mortgage success, you can look to prepare for your application.
Step 1
2. Prepare your documentation
Having the right documents ready prevents delays in your mortgage application. You will need to collect things like identification, proof of address, bank statements, and payslips, or certified company accounts if you’re self-employed.
Step 2
3. Apply
When we are happy with everything that has been provided and are confident in the lender choice, you can look to apply. Each application can take a different amount of time, this is because everyone’s circumstances and needs are different. On top of this, there are also external factors to think about like your solicitor’s turnaround time.
Step 3
4. Mortgage offer
If you are successful, you will be made an offer that outlines the terms and conditions of your loan. It’s crucial that you review all aspects carefully with your broker or solicitor. It will detail things like the interest rate, the loan amount, the repayment term, and any specific conditions or clauses. Ensure you understand all aspects of the offer before accepting.
Step 4If you want to get started on your mortgage journey today, why not reach out and speak to one of our expert advisors who will be able to discuss your situation over a free initial consultation.
Using a mortgage broker for your application
While lenders don’t require you to apply through a broker, we would always advise that you consult the support of a mortgage broker before applying. Since JBSP mortgages can be complex, an expert broker can simplify the process and improve your chances of approval.
A broker like us will be able to initially assess your suitability and then help prepare your application to put you in the best position to be offered a mortgage. If you’re thinking about getting a JBSP mortgage, why not reach out today? One of our team members will be happy to discuss your circumstances over a free no-obligation consultation.
Frequently asked questions
Yes, the proprietor can remove the other applicants later but must meet affordability criteria alone. Although, you will need to ensure that you can now afford the mortgage by yourself, as a lender will reassess your situation to determine your affordability.
The best way to understand your chances before looking to remove your sponsor(s) from the mortgage is speaking to a mortgage broker. They will be able to look at your current circumstances, like a lender would, and then advise you on your chances of success.
With a guarantor mortgage, the guarantor will only be required to cover mortgage payments if the applicant is unable to make them, unlike a JBSP mortgage where all applicants are always equally responsible for the repayments.
On top of this, with a guarantor mortgage, the mortgage will be secured against the guarantor’s home. This means that if needed, the lender can sell this to raise finances if mortgage payments cannot be made by both the applicant and guarantor.
The legal owner of the property will always be responsible for , therefore in the case of a JBSP mortgage, the proprietor will be responsible. As the non-proprietor(s) is/are not classed as an owner of the property, they will not need to contribute to the SDLT.
You can use our free Stamp Duty Calculator to find out how much Stamp Duty you will need to pay.
References
[1] Barclays, Legal Information - https://www.barclays.co.uk/mortgages/legal-information/
