Joint borrower sole proprietor mortgage

If you’re struggling to get onto the property ladder, we look at one way to make getting a mortgage easier without some of the drawbacks of buying jointly.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Aspiring first-time buyers face a challenge getting on the UK property ladder. Property prices increased by more than two thirds between 2010 and 2020 and almost doubled in Greater London according to mortgage lender Halifax. Despite the pandemic, when house buying had to be put on hold for many people, buying a first home remains a distant dream for many. 

Nationwide, the UK's largest building society and one of the largest mortgage lenders, said property prices in September 2021 rose 10% compared with a year earlier, bringing the cost of the average home to £248,742.

Why is it so difficult to buy a property?

Raising the average 20% deposit to buy a home is the main challenge for first-time buyers; and according to Nationwide a deposit mounts to a ‘record high’ of 113% of average earnings.

With house prices 11 times average earnings, research from mortgage broker Trussle found that 65% of first-time buyers feel it’s impossible to get onto the property ladder. 

In the face of these challenges, it’s not surprising so many first-time buyers turn to their parents for help. Research by Legal & General found that more than half of first timers under 35 bought a property with financial support from their parents.

Should I buy a property with my parents?

Although buying a property jointly with your mum and dad is one option, there are disadvantages to this. 

One of the main ones is Stamp Duty, a tax which is charged on property purchases of over £125,000.

If you are a first time buyer you qualify for Stamp Duty relief. First-time buyer's relief means you don’t pay Stamp Duty if you have never bought a home before, so long as the property is £300,000 or under.

If you buy with your parents who already own a property you’ll all pay Second Home Stamp Duty which is charged at 3% on properties costing more than £40,000.

One of the solutions is to take out a joint borrower sole proprietor mortgage, also known as a JBSP mortgage.

What is a joint borrower sole proprietor mortgage? 

This type of mortgage enables one person to buy a home, with the help of someone else - usually another family member. Although you will have joint responsibility for the mortgage payments, only you actually own the property.

How do you get a JBSP mortgage?

Borrowers will all have to meet the lending criteria and show that they can afford the repayments to be granted a mortgage and if one of you is unable to make the payments at any point the others are liable to pay the whole amount. Your family members are not co-owners and are not named on the title deeds so they don’t have any legal claim over the property or any increase in value.

Getting help in this way means you might be able to afford a property when you otherwise couldn’t or to get a bigger or better property, as your family members’ income is taken into account along with your own. 

They are essentially designed to help you with the mortgage payments temporarily until you can afford them by yourself. When you’ve come to the end of the initial deal period when early repayment charges no longer apply, you may be in a position to switch to a mortgage in your name only.

Can I get a JBSP mortgage if I have bad credit?

JBSP mortgages can also help you get a loan if you have no credit history or a low credit score. Once you’ve taken the mortgage out you can then build your credit rating by making the mortgage payments each month to show that you are a reliable borrower.

Lenders who offer joint borrower sole proprietor mortgages

As JBSP mortgages are a fairly niche product they are only offered by a limited number of lenders, mostly smaller building societies. These include:

  • Barclays Bank

  • Bath Building Society

  • Clydesdale Bank

  • Furness Building Society

  • Hinckley & Rugby Building Society

  • Market Harborough Building Society

  • Marsden Building Society

  • Metro Bank

  • Newcastle Building Society

  • Principality Building Society

  • Skipton Building Society

  • Tipton & Coseley Building Society

As when taking out any type of mortgage, it’s a good idea to speak to a mortgage broker, who can look at the whole market to find the best deal for you. They can also offer products not available directly from the lender and you’ll have access to compensation if you get poor advice. 

JBSP mortgage - joint mortgage sole ownership

Although joint borrower sole proprietor mortgages are usually aimed at first-time buyers, you don’t always have to be a first-time buyer to take one out. They may be available for remortgaging as well as new purchases and you can also change from a standard mortgage to a JBSP one.

How many people can take out a joint mortgage?

Up to 4 people may be able to take out the mortgage together and, while some lenders don’t specify what your relationship to the other people should be, most require them to be family members. Only you – the sole proprietor – can live in the property.

You can usually choose from any mortgage deal the lender is offering at the time and may be able to borrow up to 95% of the property’s value depending on the products available and subject to the lender’s usual affordability criteria. 

In some cases you may be asked to prove that you will be able to afford the mortgage on your own after a certain period, such as 5 years – if you’re in a profession that has clear career progression and salary increases for example. If you’re not, however, this could be tricky.

Is there a maximum age you can take out a JBSP mortgage?

The age of the oldest borrower will be used to decide the maximum mortgage term allowed. Many lenders require borrowers to have paid off their mortgage by the age of 75, although others allow up to 85 or have no age limit at all, so if you’re taking out a mortgage with your parents this may restrict the length of the term. The shorter the term the higher the mortgage repayments will be.

What else to consider before taking out a JBSP mortgage

All parties involved in the mortgage application will have to take independent legal advice to make sure they are fully aware of the implications of what they are entering into. 

Plan for the future

One of the main issues to consider is what would happen if your relationship with the family members on your mortgage broke down. It can be a complicated and costly process to have their names removed from the mortgage and, as it’s unlikely that you’ll be able to afford the mortgage on your own, selling the property might be your only option. 

Consider taking out insurance

If you’re currently paying the mortgage repayments yourself, you should also think about how you would feel if you couldn’t afford them anymore – you lost your job for example – and your family members had to cover them entirely. You might not feel comfortable with this continuing long term so decide you have to sell the property.

And as with taking out any mortgage, you need to make sure you can afford all the other costs of owning a home too, such as maintenance costs, utility bills and insurance, and consider the implications of any changes to your circumstances.

Consider a plan to switch mortgages in the future

Other than losing your job, you could become unable to work because of illness or injury, the other people on the mortgage might need to be released from the commitment – because they want to buy a property themselves for example – or you might find yourself in a relationship with someone who wants to contribute to the mortgage and become a co-owner of the property. 

Consider other types of mortgages

If you decide that a joint borrower sole proprietor mortgage isn’t for you, other ways to get help from family members to buy a home include family offset mortgages, where your relatives’ savings are offset against your mortgage debt so you pay interest on less, or a mortgage that allows family members to use their savings or equity in their home as security for your mortgage.

If you're a first time buyer or looking to move house or remortgage, we can help you find the best mortgage deal to suit your needs.