What is a Joint Borrower Sole Proprietor Mortgage?
A Joint Borrower Sole Proprietor Mortgage is a way to increase the amount you can borrow by adding a friend or family member's income to your mortgage application.
In this guide
- What is a Joint Borrower Sole Proprietor mortgage?
- How does a Joint Borrower Sole Proprietor mortgage work?
- What's the difference between a Joint Borrower Sole Proprietor and a Joint Mortgage?
- When would my guarantor come off the mortgage?
- What happens if my guarantor dies?
- What is the maximum age limit for a Joint Borrower Sole Proprietor?
- Can my guarantor live in the property with me?
- Which banks offer Joint Borrower Sole Proprietor Mortgages?
What is a Joint Borrower Sole Proprietor mortgage?
With half the number of first-time buyers there were versus 20-years ago, a Joint Borrower Sole Proprietor mortgage is a great solution for would-be buyers.
Never heard of a JBSP mortgage? No problem, they are still pretty under the radar – but lucky you've found this guide which will tell you all you need to know.
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Create a free Tembo plan to see if you qualify for a Joint Borrower Sole Proprietor mortgage, as well as other specialist buying schemes. At the end, you'll get your own personalised mortgage recommendation showing all the ways you could buy sooner, or boost your budget.
What is a Joint Borrower Sole Proprietor mortgage?
A Joint Borrower Sole Proprietor mortgage is a way for a family member or friend to help a home buyer increase their affordability, without handing over any cash. You can have up to four people on a Joint Borrower Sole Proprietor mortgage application to boost how much you can borrow for a mortgage. So if you're buying with a partner, you could add two others as 'guarantors', or up to three others if you're buying on your own.
How does a Joint Borrower Sole Proprietor mortgage work?
By adding a loved one or friend's income onto your application through a Joint Borrower Sole Proprietor mortgage, your borrowing ability will be based on your income and theirs, instead of just your own. This allows you to boost what you could borrow for a mortgage, without having to put down a bigger deposit. This is a particularly good option for buyers who are still early on in their careers, so might be on lower salaries for the next few years, but expect their earnings to rise.
For example, say you earn £25,000 a year. With a standard mortgage, you could be offered between £112,500-£100,000 from a lender. The average UK house price is now £267,100, so unless you have a deposit of over £100,000, this could make buying a property very difficult.
If you added your Mum's income of £38,000 to your own, that would give you a boosted income of £63,000, allowing you to borrow between £283,500 - £252,000 with a standard mortgage. That would increase your budget by up to £152,000!
Only the buyer will own the property (as the "sole proprietor"), but your loved one (the guarantor) will be on the mortgage as a "joint borrower", meaning they will be liable to pay the mortgage if you cannot.
At Tembo, we call Joint Borrower Sole Proprietor mortgages Income Boosts. This is because an Income Boost increases the amount that the buyer could afford because the application is based on a higher combined income. See if you're eligible here.
Learn more: The ultimate guide to guarantor mortgages
You might also like: Buying a house on your own: How to do it and is it right for you?
With Tembo's help, my daughter's homeownership dreams came true
Hear from Jo on how Tembo helped her daughter make her homeownership dreams come true with a Joint Borrower Sole Proprietor mortgage (a.k.a an Income Boost).
What's the difference between a Joint Borrower Sole Proprietor and a Joint Mortgage?
The key difference between a Joint Borrower Sole Proprietor mortgage and a Joint Mortgage is who is classed as a property owner. With a joint mortgage, all people named on the mortgage are property owners, as well as being equally responsible for repaying the mortgage. This can be a good option if you want to buy with a friend, sibling or parent. Whereas with a Joint Borrower Sole Proprietor mortgage, your loved one who is added onto the mortgage as a guarantor won't be a property owner, but will still be liable for the mortgage payments.
Which one is right for you depends on whether you want the person who is supporting your application to own some of the property with you, or have purely a supportive role. It's a good idea to get expert advice from a mortgage expert to discuss each option and work out what's best for you and your family.
Pros and cons of JBSP mortgages
Pros
Having a higher income, boosted by a loved one may mean the homebuyer can achieve their homebuying dream with a smaller deposit. This can mean they are able to buy a property sooner, potentially savings thousands of pounds in rent.
Can be a good alternative to a typical joint mortgage. In both cases, all parties are equally responsible for repaying the mortgage. But with a JBSP mortgage, because only the homeowner has their name on the property deeds, only they benefit from its value. This means that the other parties don’t usually have to pay capital gains tax or the 3% stamp duty surcharge.
Cons
All borrowers on the mortgage application will need to pass a credit check. Even if a parent is a higher earner and wants to help boost the income of their son or daughter to help them on the property ladder, if they are overcommitted with their own borrowings and outgoings – maybe their own mortgage is still big, or they have a lot of credit card debt – that will be a problem.
All of those named on the mortgage application will be liable for repaying the mortgage, but only the homeowner has any rights to the value in the property. So parents (or grandparents) who put their income at risk in this way will have no corresponding rights.
When would my guarantor come off the mortgage?
A guarantor can come off the Joint Borrower Sole Proprietor mortgage for a variety of circumstances, such as the homebuyer's income has increased, and they can now afford the mortgage on their own or they choose to sell the property.
What happens if my guarantor dies?
Unfortunately, if the loved one who's been supporting you through your home-buying journey passes away, and you can no longer afford the mortgage repayments on your own, you might have to sell the property.
What is the maximum age limit for a Joint Borrower Sole Proprietor?
The length of the mortgage term the homeowner is allowed will depend on the age of the oldest person named on the application. Most lenders require a mortgage to be paid off by age 80. So if you want to take out a 35-year mortgage term, your guarantor can be no older than 45, for example. This may limit your term if the support is coming from a parent or grandparent, and so make monthly repayments higher.
Top tip
Joint Borrower Sole Proprietor Mortgages can work out a cheaper and more convenient option for parents or grandparents trying to help sons, daughters and grandchildren onto the housing ladder.
"If your parents would prefer to contribute to your deposit, they could use a Deposit Boost mortgage instead. This unlocks money from your family member's existing property and uses that cash to either top up your deposit or create one from scratch."
Ruth
Mortgage Advisor at Tembo
Can my guarantor live in the property with me?
Unfortunately, only the homeowner (the sole proprietor) can live at the property.
Which banks offer Joint Borrower Sole Proprietor Mortgages?
Many high-street mortgage lenders and banks offer Joint Borrower Sole Proprietor Mortgages, including Virgin Money, Nationwide, Bluestone, Clydesdale Bank and Post Office Money.
Those listed below also offer Joint Borrower Sole Proprietor Mortgages, but under specific conditions:
- Norton Home Loans
- Dudley Building Society
- Skipton Building Society
- Melton Building Society
This list of lenders is non-exhaustive and could change at any time. Each lender will have its own criteria and restrictions on who it will lend to using a JBSP mortgage, and within which rules. For the most up-to-date information, and to see all of your options, it’s a good idea to speak to a specialist mortgage broker.
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At Tembo, we specialise in helping buyers boost their affordability, so they can get on the ladder sooner and for less. To see how our award-winning team could help you, create a free plan with us today.
