What is a Joint Borrower, Sole Proprietor mortgage?

Joint Borrower, Sole Proprietor, (JBSP) is where not every person listed on the mortgage are the property’s legal owners. This enables the use of other parties’ salaries when determining affordability. In turn, it can increase the amount of mortgage allowed.

This arrangement functions similarly to the more common guarantor mortgage. However, with JBSP mortgages, the parties not identified as the property owner are still accountable for the whole debt instead of only guaranteeing the monthly payment. This is known as joint and multiple responsibility.

Affordability is not only crucial when determining your eligibility for a mortgage, but also when discovering which mortgages are available to you. If the outcome of your affordability check believes you to be a risk, you are limited in what you can access.

In these situations, the addition of a guarantor is usually suggested. While this isn’t always a favourable solution to lenders, Joint Borrower, Sole Proprietor mortgages are a viable option that may be less well-known than guarantor mortgages.

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How do Joint Borrower, Sole Proprietor mortgages work?

When applying for a JBSP mortgage, the income of up to four other people can be considered. The other individuals whose incomes are considered are commonly parents or close relatives. This can allow you to borrow more compared to applying as an individual, as there is essentially more income to cover the loan amount.

For example, if your yearly income is £20,000 and a lender is willing to lend you between 4.5 and 5 times your income, the most you can borrow is £100,000 and the minimum is£90,000.

However, if one of your parents earns £30,000 a year, you could apply with them. Therefore, if you combine your income, you have a total of £50,000, meaning you could potentially borrow in excess of £200,000. This gives you an additional £100,000 when compared to what you could have initially borrowed.

However, this does mean that all the borrowers will be closely assessed by the mortgage lender, and things like income, expenses, credit score and debt will all be considered. If one borrower’s affordability is seen as bad due to something like bad credit or high debt, then it could impact the overall borrowing.

What’s the eligibility for a Joint Borrower, Sole Proprietor?

The most frequent requirement is for a parent or guardian to be assessed and named on the mortgage. However, for many lenders, this is optional.

Many lenders will welcome any family member or friend with no constraints on the nature of the relationship. Any parties that are listed on the application must be aware that this commitment may have an influence on any future borrowing they may require. They will also be expected to seek independent legal counsel in all situations.

As mentioned previously, there can be more than two applications, although normally, there will be no more than four.

On top of these eligibility requirements, all borrowers will need to meet standard mortgage requirements. This includes:

• Income & credit – all borrowers will need to prove a stable income and a good credit history. A bad credit history could lead to certain terms being imposed like higher interest rates or deposit requirements.
• Age – lenders usually set a maximum age limit, this is to give security and ensure all borrowers will be alive for the duration of the mortgage. This maximum age limit is usually around 75 years old but will vary.
• Deposit – lenders will require proof of deposit, this can typically be proved through a bank statement showing the funds.
• Employment status – proving a stable source of income through employment is also key, this is usually done through past payslips. If you are self-employed you can use things like your SA302, company accounts and bank statements to prove you have consistent work.

What are the requirements for a Joint Borrower, Sole Proprietor mortgage?

Although lenders’ requirements for a Joint Borrower, Sole Proprietor mortgage can and do vary, we’ve outlined a few of the most important factors:

• The “primary” borrower(s) must occupy the residence.
• The maximum term will be determined by the age of the applicant with the highest income.
• Available on any repayment option, i.e., repayment or interest-only, subject to an approved repayment plan.
• All non-owners must obtain independent legal counsel.
• Incompatible with some other loan programmes, such as joint ownership.
• Can be used to aid with the level of borrowing, but not to acquire a mortgage with a poor credit score.

Joint Borrower Sole Proprietor mortgage lenders

As JBSP mortgages become more popular, there are more JBSP mortgage lenders entering the market. To be eligible, you must meet specific criteria given as requirements by lenders.

Each lender has its own criteria, so even if you meet one lender’s criteria, you may not when it comes to others. We recommend you discuss your options with a mortgage broker. They are best placed to provide advice based on your circumstances and can guide you through the process.

Which banks offer Joint Borrower, Sole Proprietor mortgages?

JBSP mortgages aren’t offered by all lenders and some lenders may be more likely to offer you a deal. Some of the common banks and lenders that we have worked with to obtain JBSP mortgages are:

• Barclays Bank
• Skipton Building Society
• Bath Building Society
• Metro Bank
• Newcastle Building Society
• Furness Building Society

Benefits and drawbacks of JBSP mortgages

Understanding both the benefits and drawbacks of any mortgage product before committing to it is key and can help you make a justified and informed decision.

Below we have highlighted both benefits and drawbacks of JBSP mortgages, that could help you decide if this mortgage type is right for you. If you are still unsure, then feel free to reach out and one of our expert brokers will be happy to help.