What’s a JBSP Mortgage and How Does It Work?
At Mortgage Bridge, we often get asked about JBSP mortgages. So, what are they? A joint borrower sole proprietor (JBSP) mortgage lets you take out a mortgage with someone else—usually a parent or family member—without them being named on the title deeds. It’s perfect for first-time buyers who can’t quite afford to buy on their own but have someone willing to support them.
How Does a JBSP Mortgage Actually Work?
Here’s the deal. With a JBSP mortgage, up to four people can be on the mortgage application, but only the main buyer—the sole proprietor—will own the property. Everyone on the mortgage is responsible for the repayments, but only the buyer’s name goes on the title deeds. This way, your supporting borrower helps you get the mortgage, but they don’t own any part of the property.
Key Points:
- Joint Responsibility: Everyone on the mortgage is responsible for repayments.
- Sole Ownership: Only the main buyer owns the property.
- Affordability Boost: Combining incomes means you can borrow more.
Who Should Consider a JBSP Mortgage?
Thinking if a JBSP mortgage is right for you? It’s ideal if:
- You’re a first-time buyer and need a little extra borrowing power.
- You’re self-employed with an irregular income.
- You’re on a lower income and can’t quite borrow enough on your own.
Most people get help from parents or close family, but some lenders accept non-family members too.
How Does It Work in Practice?
Here’s an example. Sarah earns £30,000 a year, so she can only borrow around £135,000 on her own. Her dad, earning £40,000 a year, joins her mortgage application. Together, their combined income of £70,000 bumps Sarah’s borrowing power up to £315,000. That’s a big difference!
Why Choose a JBSP Mortgage?
1. Can a JBSP Mortgage Help You Borrow More?
Yes! The biggest benefit is the affordability boost. Lenders look at everyone’s income, so you can borrow more than you would on your own.
2. Will Supporting Borrowers Pay Extra Stamp Duty?
Nope. Since they’re not on the title deeds, they won’t get hit with the 3% second-home stamp duty surcharge.
3. Can You Choose Any Type of Property?
Absolutely. Unlike some government schemes, JBSP mortgages work for both new builds and older properties.
4. Can You Remove the Supporting Borrower Later?
Yes! Once you can afford the mortgage on your own, you can remortgage and take them off.
What Should You Watch Out For?
While JBSP mortgages are great, there are a few things to consider:
- Who Pays If You Can’t? Everyone on the mortgage is responsible. If you can’t pay, your supporting borrower has to step in.
- Does It Affect Their Credit Score? Yes. Missed payments will hit everyone’s credit score.
- Can They Still Get Their Own Mortgage? Possibly, but lenders will count the JBSP mortgage as a financial commitment, which could reduce how much they can borrow for themselves.
- What About Inheritance Tax? If your supporting borrower passes away, things can get complicated, so it’s worth chatting with a professional about inheritance planning.
How Is a JBSP Mortgage Different from a Joint Mortgage?
| Feature | JBSP Mortgage | Joint Mortgage |
|---|---|---|
| Ownership | Sole proprietor only | Both parties share ownership |
| Affordability Assessment | Based on combined incomes | Based on combined incomes |
| Stamp Duty Surcharge | Not applicable for supporting borrower | Applies if either party already owns property |
| Legal Rights to Property | Only the sole proprietor has ownership rights | Both borrowers have equal ownership rights |
| Future Remortgaging | Sole proprietor can remortgage without supporter | Requires agreement from both owners |
JBSP vs. Guarantor Mortgage: What’s the Difference?
Both help you buy a home, but there’s a key difference:
| Feature | JBSP Mortgage | Guarantor Mortgage |
| Who Pays? | Everyone on the mortgage shares responsibility | Guarantor only steps in if borrower defaults |
| Legal Ownership | Sole proprietor only | Sole proprietor only |
| Income Assessment | Based on combined incomes | Based on borrower’s income with guarantor support |
| Equity Rights | No equity rights for supporting borrower | No equity rights for guarantor |
What Do Lenders Look For?
Every lender’s a bit different, but here’s what they’ll usually check:
- Income: How much everyone earns.
- Credit History: Credit checks for all borrowers.
- Age: Some lenders want the mortgage repaid before the oldest borrower turns 75 or 80.
- Affordability: Can the sole borrower eventually afford the mortgage alone?
How Do You Apply for a JBSP Mortgage?
Applying is pretty straightforward:
- Chat with Us: We’ll look at your situation and see if a JBSP mortgage suits you.
- Get an Agreement in Principle: This gives you an idea of how much you can borrow.
- Submit Documents: You’ll need proof of income, ID, and credit history.
- Property Valuation: The lender checks the property’s value.
- Formal Offer: Once approved, the lender issues the mortgage offer.
- Conveyancing: This is the legal bit of transferring ownership.
When Should You Consider a JBSP Mortgage?
It might be the right choice if:
- You’re a first-time buyer and need a boost.
- You want to avoid second-home stamp duty for your supporters.
- You need more borrowing power without giving up ownership.
- You have family or close friends willing to support you.
What Are the Alternatives?
Not sure if JBSP is right for you? Here are some other options:
- Guarantor Mortgage: A family member guarantees repayments without being on the mortgage.
- Joint Mortgage: Both parties share ownership and responsibility.
- Family Offset Mortgage: Family savings reduce the mortgage balance and interest.
- Help to Buy Equity Loan: A government-backed scheme for new builds.
How Do You Remove a Supporting Borrower?
Want to take your supporter off the mortgage? Here’s how:
- Check Affordability: Make sure you can afford the mortgage solo.
- Remortgage: Apply for a new mortgage in your name only.
- Pay Any Fees: Some lenders charge early repayment fees, so check your terms.
Is a JBSP Mortgage Right for You?
If you need a bit of help getting on the property ladder but want to keep ownership in your name, a JBSP mortgage could be perfect. It gives you the borrowing power you need without giving up control.
We’re here to help. If you’re thinking about a JBSP mortgage, chat with us at Mortgage Bridge, and we’ll walk you through the process.