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First time buyer? Consider a joint borrower sole proprietor mortgage

Planning & protection

20 February 2023


Jonathan Clark

Couple moving into their newly acquired property

Helping young people to get onto the first rung of the property ladder

A Joint Borrower Sole Proprietor Mortgage (otherwise referred to as a JBSP mortgage) is a type of home loan that allows two people to borrow money together while only one of them is named on the mortgage. This can be beneficial for people who want to buy a property but don’t have enough money for a deposit or who have bad credit and need someone with good credit to co-sign the loan.

A JBSP is primarily used as a way of helping young people to get onto the first rung of the property ladder, and can assist in securing a mortgage and potentially increase the borrowing scope too. JBSP mortgages allow individuals to accept the financial support of their family, while retaining a sense of independence through sole ownership of the property.


Financial responsibilities

The main difference between this type of mortgage and other types of loans is that both borrowers are legally responsible for repaying the debt. This means that if one borrower fails to make their payments, the other borrower is still liable for the full amount.

A joint mortgage is one in which you buy a home jointly with someone else – be it a relative, friend or partner – and you share both the ownership and the financial responsibilities. Therefore, both parties are responsible for repaying the mortgage, and both have a legal claim to the property ownership.


Guarantor mortgage

By contrast, with a JBSP mortgage, the other applicant, usually a parent, takes on joint responsibility for the debt and repayments, yet has no legal claim to ownership of the property.

The only way in which a guarantor mortgage is similar to a JBSP mortgage is that the parents have no legal claim to property ownership in either. With a guarantor mortgage, parents only assume responsibility for the debt if their son or daughter can no longer meet the repayments. Conversely, with a JBSP mortgage, they agree to contribute towards the mortgage repayments from the beginning.


Combined income

Typically, a JBSP mortgage lender will consider up to four applicants for a single JBSP mortgage, although this figure can differ between providers. Usually, only two incomes will be formally considered, with any others only being taken into account as additional financial guarantees.

The amount that can be borrowed will vary between applications as well as differing lender criteria. Typically, a JBSP mortgage will allow up to four applicants and most lenders will cap your potential borrowings to 4.5 times the combined income, although some lenders may offer more.


Financial problems

However, there are some risks associated with a JBSP mortgage as well. If the person who is named on the mortgage defaults on the loan, the other person is still responsible for repaying the debt. This can lead to financial problems for both parties involved.

A JBSP mortgage is one way of helping family members buy a home, but a guarantor mortgage or a housing scheme could be more appropriate, so it’s important to understand all the options.


Want to discuss your mortgage options?

If you are considering taking out a Joint Borrower Sole Proprietor Mortgage, it is important to weigh the pros and cons carefully before making a decision. This type of mortgage can be a great way to buy a home, but you need to know the risks involved.

To discuss your requirements, contact a Fairstone adviser today.

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