A joint-borrower-sole-proprietor (JBSP) mortgage is a type of mortgage that allows two or more people to be named on the mortgage application, but only one borrower to be listed as the legal owner of the property.
A JBSP mortgage involves up to four people to apply for a mortgage together and is often used by parents who want to help their children to get on to the property ladder, although it may also be used by siblings and friends who wish to combine their income to purchase a home that just one of them will live in.
When applying for a JBSP mortgage, the income and credit history of all borrowers is considered when assessing the mortgage application in addition to all borrowers meeting the lender’s criteria. All borrowers are jointly responsible for making the mortgage payments, which reduces the risk for lenders. However, this joint liability also means that if one party cannot make the repayments, the others are liable to cover the whole amount between them, so it is essential that JBSP mortgages are only taken out with people you trust and whose financial affairs you understand.
Only one person (the proprietor) will own the property in the transaction of a JBSP mortgage. The mortgage holders are not named on the title deeds and have no legal claim over the property or any increase in its value.
Once the initial deal mortgage period ends and early repayment charges no longer apply, the sole owner can switch to a mortgage in their name only if they wish.
A JBSP mortgage can help you buy a home by increasing your borrowing capacity or improving your chances of qualifying for a mortgage. It can be particularly useful if one borrower has a stronger financial profile, such as a higher income or better credit history, which can enhance the overall mortgage application.
If you are considering a JBSP mortgage contact one of our advisors at Your Mortgage Room to discuss your options and decide if this is the best option for your circumstances.
Your home may be repossessed if you do not keep up with your repayments.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but will be agreed with you before proceeding.
Sources: https://www.money.co.uk/mortgages/guides/joint-borrower-sole-proprietor-mortgages (17/05/2023 at 14:00)
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