Buying a home can be challenging, especially if you’re doing it on your own. But what if you could enlist the help of others to make it easier? Enter the joint-borrower-sole-proprietor (JBSP) mortgage—a flexible option that allows up to four people to support a single property purchase, though only one person will own the home. Here’s a straightforward guide to understanding JBSP mortgages and how they might be the right fit for you.
What is a Joint-Borrower-Sole-Proprietor Mortgage?
A JBSP mortgage is designed to help individuals buy a home with the assistance of others, without them having to be on the property’s ownership deeds. This means:
- Multiple Borrowers: Up to four people can combine their incomes to qualify for the mortgage.
- Single Owner: Only one person, the sole proprietor, will legally own the property.
- Shared Responsibility: All borrowers are responsible for repaying the mortgage.
This type of mortgage can be especially useful if you have family members who want to help you buy a home but don’t want to take ownership themselves. For instance, parents might use a JBSP mortgage to support their child in buying their first property.
How Does a JBSP Mortgage Work?
- Combining Incomes: The combined income of all borrowers is considered, which can help you qualify for a larger mortgage.
- Creditworthiness: All borrowers’ credit histories are reviewed, and they must meet the lender’s criteria.
- Ownership and Liability: Only the sole proprietor is named on the title deeds and has legal ownership. All borrowers, however, are jointly responsible for mortgage payments.
Benefits of JBSP Mortgages
- Access to Higher Loan Amounts: Combining incomes can enable you to secure a larger mortgage.
- No Additional Stamp Duty: The additional borrowers do not incur Stamp Duty charges, which is common in joint property ownership.
- Flexible Terms: More lenders are offering competitive rates for JBSP mortgages.
Things to Consider
- Legal Advice: It’s crucial for all parties to seek legal advice before entering a JBSP mortgage. This helps clarify responsibilities and the process for exiting the mortgage.
- Future Planning: Discuss and agree on how and when non-proprietors will exit the mortgage or what happens if someone struggles to keep up with payments.
- Insurance: Consider mortgage payment protection or income protection insurance to cover repayments in case of job loss or other financial difficulties.
- Switching Mortgages: Plan how to switch to a new mortgage deal or move mortgage debt if your circumstances change.
Alternatives to JBSP Mortgages
If a JBSP mortgage doesn’t seem right for you, consider these alternatives:
- Guarantor Mortgage: A family member guarantees the mortgage with their savings or property.
- Tenants-in-Common: Each borrower owns a share of the property, which can be sold independently.
- Shared Ownership: Buy a share of a property and pay rent on the remaining part.
- Rent to Buy: Pay subsidised rent on a new-build home while saving for a deposit.
Need More Help?
If a JBSP mortgage sounds like a good fit or you want to explore other options, contact us for expert advice tailored to your needs. We are here to help you navigate the mortgage process and find the best solution for your situation.
Your Home may be repossessed if you do not keep up repayments on your mortgage. Ingrid Cairns & Associates Limited is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. A Fee May Be Charged For Mortgage Advice. The Exact Amount Will Depend On Your Circumstances But It Will Not Exceed £495.
