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What Is a Joint Borrower Sole Proprietor Mortgage?

What Is a Joint Borrower Sole Proprietor Mortgage?

By Laura Miller
Published 31 August 2022

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?
  • FAQS

With property prices soaring, and 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. This specialist mortgage is a way for a family member or friend to help a buyer increase their affordability, without handing over any cash. It's 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. At Tembo, we call this an Income Boost.

Never heard of a JBSP mortgage? No problem, they are still pretty under the radar – but you’re about to find out all you need to know.

What is a joint borrower sole proprietor mortgage?

A joint borrower sole proprietor mortgage is a mortgage where the buyer can add either a family member or friend's income onto their mortgage application. This increases the amount that the buyer could afford. Only the buyer will own the property, and all borrowers on the mortgage will be liable to pay the mortgage.

A JBSP mortgage is useful for those on lower salaries, and enables buyers to afford more expensive properties than they would be able to afford by themselves.

Having a higher income on a mortgage application makes lenders more willing to agree to loan the amount needed for the home purchase (and reduces the amount of deposit required).

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How does a JBSP mortgage work?

A JBSP works by loved ones combining forces to boost the income of the person trying to buy a home - that’s how the Tembo Income Boost mortgage gets its name.

Meet Hannah.

In her mid-twenties trying to buy a home, Hannah earns £25,000 a year. Multiplying her earnings by 4 (a common sum used by lenders to work out how much they are willing to lend for a mortgage) gives Hannah £100,000 to buy a home.

With the average UK house price now around £230,00, without a very large deposit Hannah won’t be able to buy a property.

How can a JBSP mortgage help Hannah?

With a JBSP mortgage a parent or grandparent, for example, can add their income into the mix to increase the amount Hannah can borrow.

So if we take Hannah’s £25,000 income, and add to it her mum’s income of £38,000, that gives Hannah a total income (after the ‘boost’) of £63,000.

£63,000 x 4 (in the typical way lenders do for mortgages) = £252,000

That’s £152,000 more than on her own

With a deposit of £20,000 to £30,000, Hannah is in a much better position to grab her dream home with a JBSP mortgage.

Pros and cons of a JBSP mortgage

Pros

A JBSP mortgage 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

Having a higher income, boosted by a loved one with a joint borrower sole proprietor mortgage, 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.

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.

FAQS

When would a Booster come off the mortgage?

  • If the homebuyer’s salary increased such that they were able to guarantee the mortgage and afford the monthly repayments on their own
  • If the homebuyer agreed to sell
  • If the relationship with the income booster broke down and they could get a deed of release from the lender, unlikely to if the homeowner cannot afford the mortgage

What happens if the Booster dies?

 If the homebuyer can’t afford the mortgage repayments on their own they may have to sell the property.

What is the maximum age limit?

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. This may limit your term if your boost is coming from a parent or grandparent, and so make monthly repayments higher.

Can the person live with me in the property who is joint borrower?

No. Only the homeowner can live at the property.

Which lenders offer JBSP?

Many highstreet names offer joint borrower sole proprietor mortgages, including:

Virgin Money

Nationwide

Bluestone

Clydesdale Bank

Post Office Money

 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.

If your parents would prefer to contribute to your deposit, Tembo can also advise on a Deposit Boost mortgage. 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.

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Kirsty White

Mortgage lead

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.

Moving out of a rental property and into their own home sooner using a JBSP mortgage can save the homebuyer thousands of pounds.

All financial products come with risks. It’s important to weigh up the pros and cons for your individual circumstances using an independent mortgage broker.

Like the look of a JBSP mortgage?

Book a call with one of our team to discuss further.

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