A joint borrower, sole proprietor (JBSP) mortgage allows multiple people on a mortgage while only one applicant owns the property and is named on the deeds. Usually aimed towards helping family members get a foot on the property ladder or move house, you can maximise your mortgage by combining incomes but keep sole ownership of your property.
The joint borrower, sole proprietor mortgage may be suitable to help a first time buyer with a lower income to get on the ladder, someone separating from their partner and looking to buy out them out of the home and it could help a newly self-employed person with less than 2 years proof of income.
Essentially, the higher the income, the larger the loan available. An example of this would be someone buying on their own with a 10% deposit of £30,000. They want to buy a £300k property, which would mean that they need a mortgage of £270k.
Many lenders tend to cap their lending at 4.5x the borrower’s income. If this applicant had a yearly income of £40k, that would equate to £180k. A select few lenders may offer might do 5x income (£200k)..
Therefore, even at the top end, the applicant couldn’t afford to borrow a £270k mortgage to buy the property.
However, if they were to add a second borrower on the application who earns £30k per year, it would give a combined income of 70k a year. This means that at 4.5x income the lenders could consider lending up to £315k, so they would be able to offer the mortgage on a joint borrower, sole proprietor basis.
Normal lending policy is applied to the joint borrower, sole proprietor mortgage so the lender will require the mortgage to be repaid before the oldest applicants retirement age, so if the supporting borrower is aged 55 at the point of application, the maximum term would be 15 years if they intend to retire 70 or 25 years if retiring at aged 80.
I often get asked will we pay extra stamp duty if the person going on the mortgage already owns a property. The short answer is NO, as the person is only on the mortgage and not the title deeds so does not own the property.
It’s important to consider is whether you can afford to pay a joint owner, sole proprietor mortgage on your own.
If you are adding someone to the mortgage but intend to finance the payments yourself, keep in mind that the other person will be obliged to pay the mortgage if you don’t, and that they need to seriously consider all of the financial implications of being involved.
Thank you for reading my latest blog, if you have any questions or would like some professional, friendly mortgage advice then feel free to get in touch
