If you’re struggling to get on the property ladder and have a willing family member, you could consider what’s called a Joint Borrower Sole Proprietor mortgage (JBSP).
A JBSP mortgage can give you a feeling of independence as a homeowner, without the stress of saving for a big deposit or having a high enough income. If you’re a young person looking to buy your first home, but don’t earn enough for a traditional mortgage, then a JBSP can be a good option.
Put simply, a JBSP is a mortgage that you take out with your parents or family member. You’re all responsible for paying the mortgage, but you’ll be the sole owner of the property.
You’ll all need to pass the lender’s various checks, but a JBSP mortgage could open you up to properties that you wouldn’t have been able to afford on your own. This is because your family’s income is taken into account as well as your own.
Your family won’t be expected to stay on the mortgage forever. In fact, most lenders will want you to take over responsibility for the mortgage when you start earning more.
JBSPs are flexible mortgages, so you can reduce the amount your family needs to pay over time if you want to make the bulk of the payments.
A JBSP mortgage can give you a boost at the start (when you need the most help) until your situation becomes more comfortable and you can afford the repayments on your own. When you come to the end of your mortgage deal, you may be able to switch to a mortgage just in your name.
Use our Mortgage Affordability Calculator to see how much you could borrow on a mortgage.
JBSP mortgages are a good option if you’re just starting out in your career/have a low income currently, but expect your earnings to increase. It’s also good if you have your eye on a bigger home or a property in a better location.
You might also consider a JBSP if you haven’t built up a credit history, or have a bad credit score. You can work on building your score once your mortgage is approved, and you’ll be in an easier position when it comes to remortgaging if you’ve kept up with your repayments.
JBSPs are bespoke mortgages that require carefully crafted applications, and only certain lenders offer them. If you’re thinking of taking out a JBSP, it’s best to speak to an expert mortgage broker. That’s where we come in! Make a quick enquiry to speak to an advisor.
A joint mortgage is where you borrow money to buy a home with another person - usually your partner. You’ll both be responsible for making the mortgage repayments, and you’ll both be expected to live at the property if it’s your main residence.
You can’t sell the home unless you both agree to it, as you each have a stake in the property.
With a JBSP mortgage, the other people involved - usually a family member - is jointly responsible for making the mortgage repayments. However, they have no legal ownership of the property - it’s just yours.
With a JBSP mortgage, the other person agrees to contribute equally to the mortgage repayments. With a guarantor mortgage, the other person only becomes responsible for the repayments if you can’t. In both cases, the other person has no legal claim to the property.
Usually, JBSP mortgages are designed for first time buyers. But you don’t necessarily have to be a first time buyer to get one. It’s possible you could take out a JBSP when remortgaging or moving home.
You can have up to four people named on your JBSP mortgage. Technically you can ask anyone, but most lenders will want it to be family. You’ll need to agree that only you can live at the property - your family won’t have a stake in your home.
Some lenders might need you to prove that your salary will increase after a certain amount of time. If you’re an employee with a clear career path then this will be easier. If you don’t then you might struggle to get accepted.
Lenders will also need to know the age of the oldest person on the mortgage. They’ll use this to work out how long your mortgage term can be. Most lenders need mortgages to be paid off before you reach 75, but some are more flexible. Remember, the shorter your mortgage term, the higher your monthly repayments will be.
A JBSP mortgage isn’t something to enter into lightly. It’s a really big commitment, so it’s best to get expert advice before applying.
However, if you’re looking at a JBSP mortgage then there’s a good chance you have a supportive family who might be willing to help you with your deposit. Read more in our Guide: What Deposit Do I Need to Buy a House in the UK?
A JBSP can be a great idea if you’re just starting out and need help getting on the property ladder. However, it’s not without its drawbacks, so you should consider your options carefully before committing.
You’ll miss out on the stamp duty exemption for first time buyers
Most people who get JBSP mortgages are first time buyers. If you were going for a mortgage by yourself, you wouldn’t have to pay stamp duty on properties worth £500,000 and less (this drops to £300,000 after 31st March 2021).
You might struggle if you have older parents
Mortgages are big loans, and for the repayments to be affordable it has to be paid back over a long time. Lenders want their borrowers to be able to pay off the mortgage before they get too old.
If your parents are older, you might struggle to get accepted for a JBSP. In a lender’s eyes, if a parent (who was a big factor in getting accepted) retires or passes away, then they might think you’ll struggle to afford the repayments. For this reason, some lenders have very strict age limits.
You risk your family’s credit score if you don’t keep up your payments
It’s a big financial commitment. If you don’t make your repayments then your family will have to pick up the tab. If your mortgage remains unpaid and ends up defaulting, then all your credit scores will be negatively affected.
It could be tricky if your family relationship breaks down
Even the most harmonious relationships can run into problems. If you had a falling-out with your parents while still in a JBSP mortgage, you face a tricky legal process if you want to change your mortgage contract. If you’re not yet in a position to make the repayments on your own, it can make things even more difficult.
You won’t have many lenders to choose from
JBSPs are bespoke mortgages, and because of this they can be hard to come by. They’re only offered by specialist lenders. Usually, you can’t access these lenders directly as a borrower, so you’ll need to work with a specialist mortgage broker to find them. We can help with that! If you’re looking for a JBSP mortgage, make an enquiry to get started. It only takes 60 seconds and won’t affect your credit rating.
It’s a good question, and one that takes a lot of consideration. Before pursuing a JBSP mortgage, there’s a few questions you should ask yourself:
Is my pay likely to increase over the next few years?
Am I confident enough in my family relationship to enter into a financial agreement together?
Am I prepared to eventually take on the mortgage payments by myself?
Would I feel comfortable for my family to pay the mortgage if I can’t?
Have I considered the other costs of homeownership? Such as utility bills, insurance, and moving costs?
JBSPs are complex mortgages, so it’s best to work with a specialist mortgage broker who can explain your options. The brokers we work with don’t do typical - they specialise in mortgage for applicants who don’t fit the mould. Get started today.
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Applying for a mortgage or understanding your options shouldn't be confusing, yet there are just so many myths doing the rounds and it's not easy to know where to turn to get the right advice.
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