Joint Borrower Sole Proprietor Mortgages

A Joint Borrower Sole Proprietor (JBSP) mortgage is a home loan that allows you to combine your income with a family member's to increase your borrowing power, but only one of you owns the property. 

It's a great option for first-time buyers who may struggle to secure a mortgage on their own, or for parents who want to help their child buy a home without becoming a legal owner themselves.

What Is a Joint Borrower Sole Proprietor Mortgage?

A Joint Borrower Sole Proprietor mortgage (or JBSP mortgage) is a type of mortgage where multiple people are responsible for the repayments, but only one person is named as the legal owner on the property deeds. By combining your income, typically with a family member, you can often borrow more than you could on your own.

This arrangement is particularly popular among parents who want to help their children secure a mortgage without having to take on the responsibilities of property ownership. The non-owning borrower remains legally and financially responsible for the mortgage debt, but they have no claim to the property itself.

How Does It Work?

The process for a JBSP mortgage is similar to that of a standard mortgage application, but with all applicants' incomes and financial commitments taken into consideration. Here’s a breakdown of what to expect:

• Combined Affordability Check: The lender assesses the combined income of all borrowers to determine the maximum loan amount. This can significantly increase your borrowing potential compared to applying on your own (see example below).

• Joint Responsibility: All borrowers are jointly and individually responsible for the entire mortgage debt. If the sole proprietor is unable to make the monthly payments, the other borrowers must cover the shortfall.

• Sole Ownership: Only the sole proprietor, who must be the person living in the property, is named on the title deeds and holds the legal ownership. The names of the other borrowers do not appear on the property deeds.

• Exit Strategy: Due to the unique way in which JBSP mortgages are arranged, the non-owner borrowers can be removed from the debt at some stage in the future should the sole proprietor be able to prove they have sufficient income to cover the repayments on their own. 

Because all borrowers are liable for the debt, a JBSP mortgage is considered less risky for lenders than a guarantor mortgage. This often makes it easier to get approved, especially for first-time buyers with lower incomes.

How Much Can You Borrow for a JBSP Mortgage?

Initially, lenders usually work out how much you can borrow by applying a multiple to your annual income. The typical range is between four and five times your salary. Based on this, if you were applying on your own with, say, a yearly salary of £30,000, this means you could potentially borrow up to between £120,000 to £150,000 for a mortgage. 

However, if you’re applying for a JBSP mortgage with one or more family members, a lender will assess your combined earnings. So, let’s say your parents were prepared to apply with you and their total yearly income was £50,000, using the same salary multiple range (as above), your mortgage borrowing potential is now between £320,000 to £400,000, which is a huge increase. 

To see how this might work out for you, based on your annual income, take a look at our quick and easy-to-use affordability calculator. 

You can use our mortgage repayment calculator below to see what the amount you're looking to borrow could cost you each month and check if this fits with your budget.

How Are They Different From Standard Joint Mortgages?

The key difference between a JBSP mortgage and a standard joint mortgage lies in ownership and responsibility.

• Standard Joint Mortgage: All borrowers are named on the mortgage and the property deeds. This means that everyone has legal ownership of the home, and any decision regarding selling or renovating must be made jointly. All parties are liable for any stamp duty fees or future taxes if they already own another property.

• JBSP Mortgage: All borrowers are on the mortgage application and are financially responsible for the loan, but only the sole proprietor owns the property and is named on the deeds. This means non-owning borrowers avoid paying additional Stamp Duty or Capital Gains Tax, which is a major benefit for those who already own a home. The sole proprietor has complete legal control over the property, including decisions on its future sale.

Who Can Benefit From This Type of Mortgage?

A JBSP mortgage is worth considering for a few different scenarios, especially for those struggling to meet the affordability criteria for a standard mortgage on their own.

• First-Time Buyers: The most common use case is a first-time buyer with a lower income who needs financial support to borrow enough for a property. By adding a parent or close family member to the mortgage, they can increase their borrowing potential without losing their first-time buyer Stamp Duty relief.

• Home Movers: If you're looking to move to a more expensive property but don’t earn enough on your own to secure the mortgage you need, a JBSP mortgage could help boost your affordability.

• Helping a Loved One: It’s a perfect option for parents, grandparents, or other family members who want to assist a child or relative in getting on the property ladder without becoming a legal owner of the property and incurring Stamp Duty liabilities.

Eligibility Criteria for JBSP Mortgages

Lenders have specific criteria for JBSP mortgages, and these can vary from one provider to another. While some will accept applications from friends, most prefer that the non-owning borrower is a close family member.

Here are the typical criteria that apply:

• Relationship: The additional borrowers are usually required to be immediate family members, such as a parent, sibling, or grandparent. Some lenders are more flexible and will accept wider family members (uncles, aunts, cousins, etc.). 

• Income: The combined income of all applicants will be assessed to ensure the mortgage is affordable. Lenders usually want the sole proprietor to have a minimum income of their own as well.

• Credit History: All applicants, both borrowers and the proprietor, will have their credit history reviewed. Any issues could impact the application, but several specialist lenders are available who will consider adverse credit applicants on a case-by-case basis.

• Age Limits: The mortgage term will often be capped based on the age of the oldest applicant. For example, if the oldest borrower is 65 and the lender's maximum age at the end of the term is 80, the longest mortgage term available would be 15 years.

• Residency: The sole proprietor must live in the property. Non-owning borrowers are not required to live there, but some lenders will allow it as long as the main borrower also resides there.

• Deposit: Most lenders require a deposit of at least 5%, but having a larger deposit will give you access to a wider range of mortgage lenders and more competitive interest rates.

• Independent legal advice: Some lenders might insist that both the property owner and non‑owner borrowers seek legal advice before completion, so all parties are aware of the potential risks and their responsibilities.

What Are the Pros and Cons?

A JBSP mortgage offers some fantastic benefits but also carries potential risks. It’s important to weigh them all up before you proceed.

Why They’re a Great Idea:

• Increased borrowing power. By combining incomes, you can borrow significantly more and get a foot on the property ladder sooner.

• First-time buyer relief. The sole proprietor can still benefit from Stamp Duty relief without the non-owning borrower being penalised for already owning a property.

• No security needed. Unlike other alternatives, the additional borrowers don't have to use their own property or savings as security.

• Future flexibility. The non-owning borrowers can be removed from the mortgage in the future, once the sole proprietor's financial situation improves and they can afford the mortgage on their own.

What to Watch Out For:

• Equal responsibility. All borrowers are equally responsible for the entire mortgage debt. If payments are missed, everyone's credit score is affected.

• No ownership rights. Non-owning borrowers have no legal claim to the property or any of its equity, even though they’re helping to pay for it.

• Impacts future borrowing. Being on a JBSP mortgage can affect the non-owning borrower’s ability to obtain a mortgage or other forms of credit in the future, as it counts as a financial commitment.

• Relationship strain. Money and property can be a tricky mix. You should only enter into this agreement with someone you trust completely.

Which Lenders Offer JBSP Mortgages?

Several mainstream banks will consider applications for JBSP mortgages, including NatWest, Barclays, and Skipton, as well as a number of specialist mortgage lenders, such as Vida Homeloans, Accord Mortgages, and Together Finance. As the eligibility criteria will vary from lender to lender, it’s recommended that you first seek the help of a mortgage broker with experience arranging these types of mortgages rather than approaching a lender directly. 

Our mortgage team at Picnic will help you find the right mortgage lender, offering the best terms to suit your specific needs. Just make an enquiry and one of our Mortgage Experts will be in touch. 

What Are the Alternatives to JBSP Mortgages?

A JBSP mortgage is a solid solution for anyone struggling to get on the property ladder or borrow a certain amount, but it’s not the only one. Here are some alternatives that might also work for your circumstances:

• Guarantor Mortgages: A family member or friend acts as a guarantor for the mortgage, agreeing to cover the repayments if you can't. They usually have to put up their own property or savings as security. The key difference is that a guarantor only becomes liable if you default on the loan, whereas with a JBSP, all borrowers are jointly responsible from the start.

• Gifted Deposit: This is the most straightforward option, where a family member simply gives you the money for your deposit. The lender will require a signed letter to confirm that the money is a gift and not a loan.

• Standard Joint Mortgage: If all applicants intend to live in and own the property together, a standard joint mortgage is the best choice. This is most suitable for couples, but it can also be used by friends or other family members.

• Shared Ownership: A government-backed scheme that allows you to buy a share of a property (usually 25% to 75%) and pay rent on the rest to a housing association. This reduces the mortgage amount and deposit needed, making it a very popular option for first-time buyers with a low deposit.