Joint Borrower Sole Proprietor Mortgages: Benefits and Risks for Borrowers

Getting onto the property ladder is a major financial challenge facing buyers today. Rising house prices mean that many borrowers, particularly first-time buyers, cannot borrow enough on their own to purchase the home they need. A joint borrower sole proprietor mortgage, often referred to as a JBSP mortgage, may be the solution that makes homeownership a reality.

What Is a Joint Borrower Sole Proprietor Mortgage?

A joint borrower sole proprietor mortgage is a type of mortgage that allows two or more people to share the legal responsibility for the mortgage. In contrast, only one borrower is named as the legal owner of the property. In a standard residential mortgage, the borrowers and the legal owners are usually the same people. With a JBSP mortgage, however, that is not the case.

This mortgage arrangement is popular among parents who want to help their children buy a home. The supporting borrower, usually a parent or close family member, joins the mortgage to improve affordability, but they are not named on the deeds. Because they have no legal ownership, they do not hold any rights to the property, but they share the legal responsibility for paying the mortgage.

This is different from a standard joint mortgage, where all joint borrowers share legal ownership of the property. It also differs from a guarantor mortgage, where a guarantor agrees to cover repayments if the main borrower cannot pay. In a JBSP arrangement, all borrowers are equally responsible for the mortgage repayments.

How Does a JBSP Mortgage Work?

A JBSP mortgage works by combining the incomes of all borrowers on the application to increase the amount that can be borrowed, while keeping the legal owner of the property as a single named individual. Here is how the process typically unfolds:

The sole proprietor — the person who will live in the property and own it — applies for the mortgage alongside one or more additional borrowers. All borrowers are named on the mortgage and are liable for the mortgage debt. However, only the sole proprietor is named as the legal owner and appears on the title deeds.

Because lenders assess the combined income of everyone on the application, a JBSP mortgage can significantly improve affordability. This makes it possible for a first-time buyer to borrow a larger amount than they could manage alone, using a parent’s or family member’s income to boost their borrowing capacity.

Lenders will apply their usual criteria for affordability, including assessing each borrower’s income, existing financial commitments, and credit history. Some lenders also apply age limits to additional borrowers, meaning the mortgage term must end before the older borrower reaches a certain age.

Who Can Be a Joint Borrower?

Most banks and building societies that offer joint borrower sole proprietor mortgages restrict additional borrowers to close family members, like parents, siblings, or grandparents. Not all lenders offer joint borrower sole proprietor arrangements, so it is important to work with a professional mortgage broker who knows the market.

Key Benefits of a JBSP Mortgage

A joint-borrower-sole-proprietor mortgage offers several advantages:

• Improved affordability: Combining incomes allows the sole proprietor to borrow more, helping them get on the property ladder sooner.
• No additional stamp duty: Because the supporting borrower is not a legal owner of the property, they are not subject to the additional stamp duty surcharge that applies when someone already owns a property and purchases another. This is a significant saving compared with a joint mortgage, in which both parties own the home.
• First-time buyer status preserved: The sole proprietor retains their first-time buyer status, which may entitle them to stamp duty relief and access to first-time buyer mortgage schemes.
• No rights to the property: The supporting borrower takes on the mortgage debt without any rights to the property, meaning the sole proprietor retains full legal ownership.

What Are the Risks to Consider?

While a JBSP mortgage is right for many borrowers, there are important risks to consider before taking out a mortgage of this kind. All borrowers are responsible for the mortgage repayments, meaning that missed payments will affect the credit records of everyone named on the mortgage. The supporting borrower should seek independent legal advice to ensure they fully understand the implications of being liable for the mortgage debt without any legal ownership.

It is also worth considering how and when the supporting borrower might exit the mortgage. Removing a borrower from the mortgage is not always straightforward, and usually requires a remortgage, subject to the sole proprietor meeting the lender’s affordability criteria on their own. Planning the exit strategy at the outset is advised and early repayment charges may apply.

How Eden Hawk Can Help You Find the Right JBSP Mortgage

Not all lenders offer joint borrower sole proprietor mortgages, and those that do have varying criteria around age limits, income booster calculations, eligible borrowers, and the number of additional borrowers they will consider.

At Eden Hawk Financial Solutions, our experienced mortgage advisers can help in several ways:

Access to a wide range of lenders. As whole of market mortgage brokers, we search across banks, building societies and specialist lenders to find the most suitable mortgage deal for your circumstances. We know which lenders offer joint borrower sole proprietor arrangements and what their specific requirements are.

Tailored affordability assessment. Before you make a mortgage application, we assess your situation in detail, including the combined income of all borrowers, so you know exactly how much you may be able to borrow and which lenders are likely to accept your application.

Expert guidance on stamp duty. We help you understand the stamp duty implications of a JBSP mortgage versus other borrowing options, so you can make an informed decision about the right type of mortgage for your family.

Support throughout the process. From the initial conversation through to completion, our team provides clear, straightforward advice to help borrowers understand their obligations and ensure the mortgage arrangement works for everyone involved.

A JBSP mortgage is one of several options available to buyers who need help with borrowing. Our brokers can also advise on guarantor mortgages, standard joint mortgage products, and other mortgage products that might suit your needs. We’re here to help you find a mortgage that can help you buy a home and build long-term financial security.

Frequently Asked Questions

Is the supporting borrower responsible for the mortgage? Yes. All borrowers named on a JBSP mortgage are equally responsible for the repayments on your mortgage. If the sole proprietor can’t pay the mortgage, the supporting borrower must cover the payments.

Will a JBSP mortgage affect the supporting borrower’s ability to get their own mortgage? Yes, because the supporting borrower is named on the mortgage, the repayment obligation will be factored into any future mortgage application they make.

Can you remove someone from a JBSP mortgage? Yes, but it usually requires a remortgage application once the sole proprietor can demonstrate sufficient income to meet affordability requirements on their own.

Do all lenders offer a JBSP mortgage? No. The number of lenders offering this product is more limited than for standard residential mortgage options. A professional mortgage broker, like Eden Hawk, can identify which lenders currently offer them.