Joint Borrower Sole Proprietor
Posted on 24th February 2023 at 15:29
Known as JBSP, joint borrower sole proprietor enables you to buy your new home with up to 4 people combined on the mortgage.
Your parent or relative can go on the mortgage with you to help boost your income. All income and expenditure for all parties is taken into consideration.
This is not a joint mortgage as the relative will not be on the property deeds, they will just be on the mortgage. This means for the first time buyer it does not effect their stamp duty entitlement.
All borrowers will have joint responsibility for the mortgage. This means if a mortgage payment is missed, another applicant will need to step in to make the payment. This therefore lessens the risk for the lender. For the applicants not listed on the property deeds, they have no legal right over the property or any subsequent equity growth. At the end of the discounted period, the sole proprietor of the mortgage can then look to remortgage the property into their own name, or continue with the scheme until they are in an affordable position to take the mortgage on their own.
The same checks will be completed by lenders to ensure all applicants qualify for their lending criteria. This will involve going through income and expenditure, credit history, bank statements and age at application. As the normal rules apply, most lenders will stipulate no lending past 70 years of age. This therefore may dictate the overall term of the mortgage.
The reason why this is not classed as a joint mortgage is firstly because not all borrowers will be living in the property, something lenders will insist on for a standard mortgage. Secondly, it does not effect stamp duty eligibility. Normally if you already have a property in your name, any additional property purchases would be subject to additional 3% stamp duty (under today's terms). As not all borrowers are on the property deeds, this rule is not applicable. Finally, the applicants not named on the deeds can exit the mortgage easily when the time is right and the sole proprietor can afford the mortgage on their own.
We currently work with a number of lenders who specialise in JBSP mortgages. This is a fantastic way to help your loved ones get on the property ladder.
Contact me to find out more about how JBSP could work for you.
Tagged as: first time buyer, joint borrower sole proprietor
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