Financing your first home can be tricky. A joint borrower sole proprietor mortgage means you don’t have to do it alone

A recent report shows the average home costs 7.7 times the average salary in England and 5.9 times average earnings in Wales. The figures underline the major challenge that first-time buyers face. 

It’s just not that easy to get onto the property ladder without a bit of a leg up – and a joint borrower sole proprietor (JBSP) mortgage can be just that. By teaming up with a family member, you can increase the amount you can borrow.

Here’s how a JBSP works and who it’s for.

How do joint borrower sole proprietor mortgages work? 

A JBSP mortgage means that close friends or family members can help you pay your mortgage – you’re all joint borrowers. But you alone will be the legal owner and it’ll be your name on the deeds – you’re the sole proprietor. 

In most cases, up to four people can be on a JBSP mortgage. All of you are legally responsible for getting the mortgage paid.

JBSP mortgages are:

• Liberating. By increasing the pool of your household income, more options become available to you than before.
• Flexible. As your income grows, you can decrease the amount your friends or relatives pay.
• Empowering. You can become a first-time homeowner while you build your career.

‍Who can get a JBSP mortgage?

You should be eligible for a JBSP mortgage if you have:

• Stable income
• Good credit 
• Time on your side. Many lenders have an upper age limit for the oldest borrower taking out a new JBSP mortgage. This is generally around 75 to 80 years old, which means they’d need to be about 50 to 55 when taking out a 25-year mortgage term.
• Joint borrowers who don’t have a lot of other debts. If they’re paying off a big mortgage themselves, some lenders may be reluctant.

A joint mortgage with your parents

“Had enough of living at home? JBSP mortgages are typically aimed at first-time buyers whose parents are willing to chip in to help them buy a decent place they otherwise couldn’t afford, or in an area they couldn’t afford. 

“Your mortgage lender will take your parents’ salaries into account when deciding how much you can borrow, which boosts your borrowing power. There are other ways parents can help, such as giving you some money towards your deposit - we’ve got a guide on gifting some or all of a deposit, too.”

Will Rhind, mortgage expert 

How much can you borrow? 

This will depend on the lender, but as a ballpark:

• Add the income of the borrowers together
• Multiply that number by 4.5
• That’s the amount you should be able to borrow

How does it work in practice? 

• You earn £30,000 a year.
• Multiply it by 4.5 to see what mortgage you’re likely to get. 
• That’s £135,000 that you may be able to borrow. Tricky. Because the average property price in the UK is currently around £290,000.

Not to worry. Your mum steps in. 

• She earns £50,000 a year.
• Together, you earn £80,000.
• Now multiply that by 4.5, and you have £360,000. Bingo. Things just got a lot easier.

Who owns the property?

You do. A JBSP is different from other types of joint mortgage that you might have come across, as we’ll explain.

JBSP vs joint mortgage

A joint mortgage is when you buy a property with someone else. You both own the property, and you’re both responsible for the mortgage. If one person can’t pay, the other one has to cover them. 

But with a JBSP mortgage, only you own the property, even though someone else is helping you pay back the amount you owe.

JBSP mortgage vs guarantor mortgage

A guarantor mortgage means that someone else — usually a close relative — backs you up if you can’t make payments. They will only step in to help if you’re struggling. 

On the other hand, with a JBSP mortgage, they will help you cover the costs from the get-go.

There are many types of mortgage and if you’re unsure, the best thing is to chat to a broker.

What are the stamp duty implications of a JBSP mortgage?

The short answer? It’s good news for the people who help you out with your mortgage. 

If you buy a home over a certain threshold, you must pay tax on it. In England and Northern Ireland, it’s called stamp duty land tax (SDLT), or just stamp duty. The threshold is £125,000 and the tax starts at 2% of the property value and goes up from there, depending on how much your property is worth. There are similar taxes in Wales and Scotland.

There are special benefits for first-time buyers and in certain situations, you don’t have to pay all (or any) of this tax: 

• If you’re a first-time buyer in England or Northern Ireland, your threshold will be £300,000 not £125,000 before you pay any stamp duty. The property must be worth less than £500,000. In Scotland, it’s £175,000 for first-timers and in Wales, it’s £225,000 for everyone.
• If you buy your home for less than the threshold amount, you don’t have to pay any tax.
• Additional residential properties, such as buy-to-let properties and second homes, require you to pay higher rates of stamp duty. For second homes, you’ll usually have to pay the normal stamp duty PLUS a surcharge – minimum 5% extra in England.

But if the joint borrower is not listed as an owner—as with a JBSP mortgage—they won’t be liable for the higher rate of stamp duty, even if they already own another property. Happy days.

In practice? Say your parents come on board your JBSP mortgage, and they already own their own home; your home will not be considered their second home. That’s because they aren’t technically owners—only joint borrowers.

Can you get a sole mortgage with joint ownership?

A sole mortgage with joint ownership is not as easy to come by. That’s because lenders are not too keen on having owners involved who are not liable for the mortgage payments. 

If you’re married or in a common-law partnership and are looking to buy property together, you may opt for :

• Single ownership. The home will be in one partner’s name and they’ll be responsible for the mortgage payments.
• Joint ownership. The home will be in both partners’ names, and they’ll both be responsible for the mortgage payments.
• Tenants-in-common. One partner owns more of the home than the other (say, in a 70/30 split). 
• Everyone’s situation is different and figuring out what will work for your unique set of circumstances can be overwhelming. Our job is to help you do that. Have a play with our online mortgage calculator or chat to a mortgage broker now, for free.

What are the pros and cons of JBSP mortgages?

Pros of JBSP mortgages

• You can get on the property ladder faster.
• You could buy a larger place than you could afford on your own.
• You could buy in an area that’s beyond your price range.
• If you can repay your loan faster, thanks to the others chipping in, your repayments will go down.
• Other borrowers can avoid the stamp duty that applies to second homes.

Cons of JBSP mortgages

• Credit checks matter for both you and those helping with your mortgage. For example, getting a JBSP may be tricky if your parents have other debts.
• The person who helps you out may not be able to live in the home with you. But there are some lenders that will be flexible on this.
• It’s less appealing for your backer. If someone agrees to come on board to help you pay your mortgage, that’s great for you — but maybe not as great for them. They will be liable for repaying the mortgage, but they won’t have legal ownership of the property.
• It could be a credit risk. If anyone defaults on their payment, the other borrowers are responsible. And if there’s no plan in place to make the payments, everyone’s credit score could suffer.
• Age matters. Because you have to complete the mortgage term, there are some age limits in place with most lenders. The oldest borrower in the arrangement usually has to be younger than 80 years old by the time the mortgage term is completed. 

In a nutshell

A JBSP mortgage is just one type of mortgage and it may suit you if your income is currently low but you expect it to increase, and you have relatives or close friends who are happy to contribute as borrowers without owning property. To see whether a JBSP deal could suit you, it’s wise to have a chat with a broker.

‍Frequently asked questions

Which lenders offer JBSP mortgages?

Not all lenders offer JBSP mortgages, but several big names are on the list, including Barclays, NatWest and Metro Bank. Bath, Newcastle and Principality building societies also offer them. 

Sometimes they’re called “family-backed” mortgages or “boosted” mortgages.

What deposit do you need for a JBSP mortgage?

The size of your deposit will depend on your lender’s criteria, your credit history and how much you’re borrowing but it’s likely to be at least 5% and could be up to 25%.

What happens if you don’t make your repayments?

If you don’t make payments on your JBSP mortgage, this will harm the credit score of all the borrowers on the mortgage, not just yours. The joint borrowers become responsible for making the payments if you don’t make them. Ultimately, your home can be repossessed if you don’t make the payments.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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