Joint Borrower Sole Proprietor / JBSP Mortgage
The Ultimate guide to getting an JBSP Mortgage.
Joint borrower sole proprietor mortgages (JBSP) are becoming increasingly popular in the UK. They offer an alternative option for home buyers who are struggling to get a mortgage on their own. This type of mortgage allows more than one person to be named on the mortgage, but only one person is named as the sole owner of the property.
In this article, we will explore what joint borrower sole proprietor mortgages are, how they work, their benefits and drawbacks, and whether they are right for you.
What is a Joint Borrower Sole Proprietor Mortgage?
A joint borrower sole proprietor mortgage is a type of mortgage that allows more than one person to be named on the mortgage, but only one person is named as the sole owner of the property. This means that all borrowers are jointly liable for the mortgage payments, but only one borrower is responsible for the property.
The JBSP mortgage is often used to help first-time buyers get on the property ladder, as they can team up with a family member or friend who may have a better credit score or a higher income. This can increase the chances of getting approved for a mortgage.
How do Joint Borrower Sole Proprietor Mortgages work?
Joint borrower sole proprietor mortgages work by combining the income and credit scores of all borrowers to determine whether the mortgage is affordable. All borrowers are jointly and severally liable for the mortgage payments, which means that if one borrower cannot make a payment, the other borrowers must make up the shortfall.
The mortgage is registered in the name of the sole proprietor, who is responsible for the property. This means that if the sole proprietor defaults on the mortgage payments, they could potentially lose their home.
Benefits of Joint Borrower Sole Proprietor Mortgages
One of the main benefits of JBSP mortgages is that they can increase the chances of getting approved for a mortgage. By combining the income and credit scores of all borrowers, the mortgage lender may be more willing to lend a larger amount or approve a mortgage application that may have otherwise been declined.
JBSP mortgages can also be a useful option for first-time buyers who may not have a large deposit or a high income. By teaming up with a family member or friend who does have a larger deposit or higher income, the mortgage application may be more successful.
Another benefit of JBSP mortgages is that they can be a good way to help family members onto the property ladder. Parents, for example, can team up with their children to help them buy their first home. This can be a win-win situation as the parents can provide financial support to their children, and the children can benefit from the higher income and credit scores of their parents.
Drawbacks of Joint Borrower Sole Proprietor Mortgages
While JBSP mortgages have many benefits, they also have some drawbacks that should be considered before applying for one.
One of the main drawbacks of JBSP mortgages is that all borrowers are jointly and severally liable for the mortgage payments. This means that if one borrower cannot make a payment, the other borrowers must make up the shortfall. This can put a strain on relationships, particularly if one borrower is struggling to make payments.
Another drawback of JBSP mortgages is that they can be more complicated than traditional mortgages. There may be legal and tax implications to consider, and it may be more difficult to sell the property if all borrowers are not in agreement.
Finally, it is worth noting that not all mortgage lenders offer JBSP mortgages, so it may be more difficult to find a lender who is willing to offer this type of mortgage.
Are Joint Borrower Sole Proprietor Mortgages right for you?
Whether a JBSP mortgage is right for you depends on your individual circumstances. If you are struggling to get approved for a mortgage on your own, or if you are a first-time buyer with a lower income or deposit, a JBSP mortgage may be a good option to consider. By teaming up with a family member or friend who has a higher income or deposit, you may be more likely to get approved for a mortgage.
However, it is important to consider the potential drawbacks of JBSP mortgages, such as the joint and several liability for mortgage payments and the potential legal and tax implications. It may be worth speaking with a financial advisor or mortgage broker to determine whether a JBSP mortgage is the right option for you.
In addition, it is important to carefully consider who you choose as a joint borrower. This is someone who will be jointly liable for the mortgage payments, and who you will be sharing a property with. It is important to have a good relationship with this person and to discuss expectations and responsibilities before applying for a JBSP mortgage.
Different types of JBSP Mortgage:
Fixed Rate Mortgages | Fixed rate mortgages offer a set percentage of interest over a fixed amount of time. This means that your monthly payments will usually be the same each month for the fixed rate period. This type of mortgage often has an early repayment charge that means you have to pay a fee to exit the mortgage during the initial period. |
Variable Rate Mortgages | Many mortgages such as Discount, Tracker, or Standard Variable JBSP mortgage products count as a variable rate mortgage. They all have one thing in common, that the rate will vary depending on either the lenders variable rate or the Bank of England base rate. This therefore means that your monthly payment could also vary over time, meaning they could go up or down. |
Who can get a joint borrower sole proprietor mortgage?
Joint borrower sole proprietor mortgages (JBSP mortgages) are a type of mortgage that allow two or more people to apply for a mortgage together, but only one person will be named as the sole owner of the property. This type of mortgage can be useful for people who may not be able to qualify for a mortgage on their own, such as first-time buyers with a lower income or deposit.
In order to get a JBSP mortgage, there are certain eligibility criteria that must be met. Firstly, all borrowers must meet the lender’s affordability requirements, which means that they must be able to demonstrate that they can afford the mortgage payments. This is based on factors such as income, outgoings, and credit history.
Secondly, all borrowers must have a good credit score, as this will be considered by the lender when assessing the mortgage application. It is important to note that even though the mortgage is a joint application, each borrower’s credit score will be assessed individually.
Thirdly, it is important to choose a joint borrower who has a good credit score and income, as this will improve the chances of getting approved for a mortgage. It is also important to have a good relationship with the joint borrower, as they will be jointly liable for the mortgage payments and will share ownership of the property.
In addition to these eligibility criteria, it is important to consider the potential legal and tax implications of a JBSP mortgage. It may be worth speaking with a financial advisor or mortgage broker to determine whether a JBSP mortgage is the right option for you.
Overall, anyone who meets the eligibility criteria and is looking to buy a property with a family member or friend may be able to get a joint borrower sole proprietor mortgage. However, it is important to carefully consider the potential risks and benefits before making any decisions.
Conclusion
Joint borrower sole proprietor mortgages are a useful option for home buyers who are struggling to get approved for a mortgage on their own. They allow more than one person to be named on the mortgage, but only one person is named as the sole owner of the property.
While JBSP mortgages have many benefits, such as increasing the chances of getting approved for a mortgage and helping family members onto the property ladder, they also have drawbacks that should be carefully considered.
If you are considering a JBSP mortgage, it is important to speak with a financial advisor or mortgage broker to determine whether it is the right option for you. It is also important to carefully consider who you choose as a joint borrower and to have a good understanding of the potential legal and tax implications of this type of mortgage.