Joint borrower sole proprietor mortgages explained

How a JBSP mortgage works

With a normal joint mortgage, everyone on the mortgage also owns the property. A joint borrower sole proprietor mortgage separates the two:

• The proprietor (often a first-time buyer) is on the mortgage and owns the property.
• The joint borrower (often a parent) is on the mortgage but not on the title deeds.

The lender looks at both incomes when deciding how much to lend, so the buyer can usually borrow more than on their own.

What the joint borrower is taking on

Full liability for the debt

All borrowers are jointly and severally liable. If the payments aren’t made, the lender can ask the joint borrower to pay the whole amount, not just half. Missed payments can also affect the joint borrower’s credit file.

No ownership

Because they’re not on the title, the joint borrower has no share in the property and no automatic right to any money if it’s sold. If they want their contribution protected, that needs to be agreed and recorded separately, and the lender’s terms may limit what’s possible.

Impact on their own borrowing

The mortgage appears on the joint borrower’s credit file and counts towards their commitments. That may affect their ability to borrow for themselves, for example to remortgage or retire on schedule.

Advantages

• helps the buyer borrow more using a family member’s income
• the helper doesn’t have to put down cash
• because the helper doesn’t own the property, it may not count as them buying a home. Your conveyancer or a tax adviser should confirm the stamp duty position for your case
• the buyer keeps full ownership

Risks and things to agree first

• What happens if the buyer can’t make payments: will the helper step in?
• How and when the helper comes off the mortgage, for example when the buyer can remortgage alone
• What happens if the relationship changes, or the buyer wants to sell
• Whether the helper’s own retirement or borrowing plans could be affected
• Age limits: lenders often set a maximum age at the end of the term for the older borrower

Why the lender wants independent legal advice

The joint borrower is taking on a large liability for a property they won’t own. That’s exactly the situation the courts had in mind in Etridge. Lenders usually require the joint borrower to have advice from a solicitor who isn’t acting for the buyer, and some lenders want the owner advised too.

Your solicitor will explain the liability, ownership and exit options, check the decision is yours, and sign the lender’s certificate. See ILA for a JBSP mortgage.