The phrase Joint Borrower Sole Proprietor can be a bit of a mouthful – but what does it really mean? 

If you’ve been shopping for a new home and mortgage to match, you’ve most likely come across this strange long phrase – or its mutch catchier acronym, JBSP. Essentially, JBSP mortgages are designed for buyers looking to take out a mortgage with someone else (for example, a parent or partner), but don’t want that person to be a co-ower (i.e. named on the title deeds or entitled to a stake in the property).    

In most cases, this type of mortgage is used by first-time buyers seeking to leverage the support of their parents when getting onto the property ladder. By allowing buyers to a secondary figure’s income in their affordability assessment, JBSP mortgages give access to bigger, better lending figures – and therefore, bigger, better homes. Once secured, they also provide huge payment flexibility by allowing other parties to chip in whilst the buyer builds up a more modest income, essentially helping get buyers to get their hands on the keys to a home where they may not have been able to otherwise.  

How do JBSP Mortgages Work?    

Though the name ‘Joint Borrower Sole Proprietor’ seems complex, the inner workings of this mortgage type are actually relatively simple!  When applying, you’ll be able to include up to 4 people in your affordability assessment depending on the exact requirements of your chosen lender two of whose contributions will be formally considered as income – one being the buyer. The remaining two parties’ income will act as a financial guarantee, improving approval prospects across the board.

Securing a Joint Borrower Sole Proprietor Mortgage

So, in order to kickstart your mortgage journey, you’ll need to select up to three additional individuals to be named in your application. In the case of most mortgage lenders, your chosen ‘supporting’ parties must be family members or close relations, however, there are options out there with slightly less imposing restrictions (e.g. no regulations surrounding the relationship between buyer and ‘non-proprietors’) – meaning you shouldn’t give up at the first hurdle if your situation is a little different! 

Speaking of rules and regulations, although some lenders may set limits on employment situations and credit scores when it comes to JBSP mortgages, there are options out there for self-employed buyers, those with low credit scores, and even those with no credit score at all. Regardless, prior to starting your application, you’ll need to consider your income position, and how it’ll impact your chances of success. As with most mortgages, your application and unique circumstances will be assessed by a broker or lender on a case-by-case basis. Of course, a JBSP mortgage is a brilliant solution to those in the above circumstances, adding credibility and financial backing to your appeal. For those in need of a little extra assistance beyond the signed support of on-proprietors, JBSP mortgage lenders will also accept gifted deposits – most typically from immediate relatives. 

In order to get the keys in your hands and celebrations underway, you’ll also need to select a home that aligns with your requirements. In terms of property, there are little to no restrictions when it comes to this mortgage type. In fact, buyers are essentially allowed to purchase any type of residential home – giving it a leg-up on first-time buyer schemes such as Help to Buy, wherein a new build is the only option and pricing limits remain firmly in place.

With all of the above set, alongside all of the other regular mortgaging bells and whistles, you should be ready to move in – benefitting from the financial support of your non-proprietors, flexible payments, and more. 

After Moving In

The JBSP journey doesn’t end after you’ve moved in. Most mortgages of this type work on the assumption that the buyer will, with time, work their way up to a more financially secure position, taking over full repayment from their supporting parties whenever is comfortable to do so. At this point, remortgaging should be on the cards – removing the non-proprietors from their legal obligations. 

Re-mortgaging can be an intimidating business for those ‘going it alone’, but doesn’t have to be. With the assistance of an experienced broker, you should be able to navigate the mortgage maze with relative ease, approaching your existing provider for a new, better deal, or switching to a different lender. Either way, after closing the deal, you should become the sole mortgage holder. At this point, keep in mind that a rise in salary doesn’t mean an automatic remortgage approval; lenders will take into account credit card balance and additional loans. If you’re currently looking to remortgage your JBSP mortgage and are overwhelmed by the market, why not get in touch with Fees Free Mortgages for a consultation at no extra cost? 

Who is Eligible for a JBSP Mortgage?

JBSP mortgages are accessible to most buyers-to-be, though, those looking to apply have the credit histories and traits of up to three secondary parties -not just themselves – when it comes to box-ticking. Though the exact rules applicants must adhere to will depend on the broker used or lender selected, our experts often run into the following key considerations:

• As with many mortgaging deals, joint borrower sole proprietor mortgages often involve an age limit. Though inconvenient for those working with family members such as grandparents, as this mortgage type relies heavily on the completion of its term, an upper limit is often necessary, and is generally around 75-80 at completion, meaning at the start of a 25-year term, the oldest a non-proprietor or applicant can be is often 50-55. 

• Credit history and income is important for loan applications – particularly when it comes to large sums and even larger terms such as those involved in mortgaging. In this context, for example, if a non-proprietor has an existing mortgage or loan to pay off, their overall contribution to the borrowing sum will be reduced. 

• In the vast majority of cases, none of the applicants supplementing the sole proprietor’s income may live on the property. 

The Pros and Cons of Joint Borrower Sole Proprietor Mortgages

JBSP mortgages are hugely beneficial to first-time buyers and those with low income looking to secure a home with the assistance of those closest to them. But what more can they offer, and where do they fall short? Our experts have laid out the highlights and low points for you in simple bullet points: 

Pros

• Allows those on a low income to unlock larger loans and better homes using supporters’ higher salaries 
• Provides flexible payment options for all involved (i.e. non-proprietors can contribute to repayments for any term)
• Lets buyers purchase a home earlier whilst building on salary 
• Accepts deposit gifts from immediate family 
• Has no restrictions on property age or price, unlike Help to Buy schemes
• Non-proprietors need not pay stamp duty or capital gains tax

Cons

• Requires a deposit with few 90-95% options available. In today’s market, the average deposit of 15% can equate to huge cash sums. 
• Places credit responsibility upon up to four parties. If payments go unmade, the credit history of each non-proprietor can be affected
• Requires a credit check
• Imposes an age limit upon joint borrowers (in most cases, 80)

Preparing to Secure a JBSP Mortgage

Before jumping into your JBSP mortgage application and stating your homebuying journey, our advisors suggest taking the following steps in order to maximise your chances of success:

Consider All of Your Options

Before committing to one mortgage type, it’s best to explore the market to discover an option that works best for you. If you’re a first-time buyer, consider investigating the pros and cons of shared equity mortgages and the Help to Buy scheme – weighing up all of your options before committing. Remember, there’s no one ‘best’ or ‘one size fits all’ option – be sure to consider your individual circumstances and needs. 

Seek Advice

The best way to get things right the first time is to seek the advice of a professional. In some cases, this may involve legal consultations, particularly where may, non-proprietory parties are involved. To further this, you may wish to get advice from an independent mortgage broker with regard to the JBSP process, lenders, and more. Fees Free Mortgages are proud to offer free mortgage advice sessions and consultations for those seeking to secure this mortgage type. 

Insurance Matters        

In most cases, no insurance means no mortgage! One of the most important preparatory steps to securing your JBSP and home is to nail down a mortgage payment protection or income protection insurance package – ensuring your protection in the rare (but possible) case of non-repayment. 

Make Exit Plans in Advance

With so many close parties involved, and such large volumes of cash at stake, planning is key to a smooth JBSP term. For this reason, our experts highly recommend working with your non-proprietors, legal team, mortgage broker, or all of the above to outline a comprehensive outline of how and when the former will exit the mortgage. Scenarios such as non-payment from a supporting party should also be covered.

Remember – Remortgaging!

Though the days of full monthly mortgage payments may seem far in the future for those enjoying the benefits of a JBSP mortgage, it’s always a good idea to consider your future steps at an early stage. After you’ve built a secure income and are able to take the mortgage into your own hands, you’ll need to remortgage – finding a new deal in order to remove the legal responsibility of your supporters. Keep this in mind!    

Who Offers Joint Borrower Sole Proprietor Mortgages?

JBSP mortgages are offered by a number of lenders on a similar basis to standard mortgages – albeit with fewer options for those seeking a deposit between 5 and 10%. Current offerings include large players such as Barclays Bank and Metro Bank, with a list of Building Societies in the mix.

If you’re seeking to secure a JBSP mortgage and are confused by the offerings available on the market, a mortgage broker could be the option for you – helping you secure the best possible deal, whilst dealing with the browsing and paperwork phases on your behalf.

Start your Joint Borrower Sole Proprietor Mortgage Journey Today

Is low income proving an obstacle to securing your first home? Does your family want to chip in to help you secure your independence? A joint borrower sole proprietor mortgage could be the best possible borrowing option for you. 

We understand that securing a mortgage with up to three other parties can be an organisational nightmare – especially if you’re new to the mortgage process in general! If you’re lost on your JBSP journey, our team of mortgage specialists and market experts are here to help. 

For fees-free mortgage advice, or to discuss any of our services, please reach out to us using the contact form below, visit us in our flagship branch, or reach out to your local advisor.