Joint Borrower, Sole Proprietor Mortgages

Are you planning on buying a property with the help of someone else? Arranging a joint borrower, sole proprietor (JBSP) mortgage could be what you need. Multiple applicants can make getting the house you want easier. Here we’ll explain how to get one of these mortgages, how to calculate how much you can borrow, and the tax implications.

What is a joint borrower, sole proprietor (JBSP) mortgage?

This type of mortgage allows you to buy a property with multiple applicants (usually up to four people), but only one person will be living at the house as the sole proprietor and legal owner. Additional applicants are not named on the title deeds and have no legal claim to the home (or any rise in its value). 

It’s a borrowing arrangement that’s rising in popularity because it can allow family members to support a house purchase. A joint borrower, sole proprietor mortgage allows the main applicant to benefit from the financial support of others without them having any ownership rights. It’s particularly useful for first-time buyers (FTBs) looking to get on the property ladder, or as a mortgage for pensioners who might be working less (if at all). 

All applicants share joint responsibility for the mortgage payments, which lowers a lender’s risk. Using the strength of multiple applicants can bolster your chances of borrowing more money, favourable mortgage terms, and lower interest rates.

Eligibility criteria

For a joint borrower, sole proprietor mortgage, lenders will assess your financial circumstances and anyone else being named on the application. 

The exact eligibility requirements will vary, but the main areas to be looked at will include:

• Your deposit - the amount you’re putting down as a deposit will affect the loan-to-value (LTV) ratio. A higher deposit, meaning a lower LTV, will be favoured by some lenders as it lowers their risk further for a JBSP mortgage.
• Credit history - lenders will take a thorough look at your credit history, alongside any others being named on the mortgage. Ideally, it’s best if everyone involved has good credit, but there are still options if you (or any borrowers) have bad credit.
• Income - prospective lenders will want to see that the mortgage repayments are affordable. You can expect them to look into everyone’s finances and outgoings (including any debts) to ensure income stability and ensure you can (collectively) keep up with payments.
• Age limits - Most lenders will want the loan paid off by the time the oldest borrower reaches 80. So, if you have parents or grandparents helping - this could limit the mortgage term (meaning higher monthly repayments).

How much can you borrow?

This is where the extra borrowers can be extremely helpful, especially if you’d otherwise be borrowing based on a single income. 

Typically, most lenders will let you borrow around 4.5x your salary. However, with a joint borrower, sole proprietor mortgage, every applicant’s income can be used in the calculations. So, borrowing a larger sum is more realistic. 

For example, if you earn £30,000 a year, you may only be able to borrow £135,000. However, if you add two additional borrowers on the application, each earning £30,000 annually, your combined borrowing capacity could increase to £405,000.

Enter the applicants’ combined income into out calculator below to get an idea of the amount you can borrow on a JBSP mortgages:

How to get a JBSP mortgage

Several lenders offer joint borrower, sole proprietor mortgages, but the process can get complex (or expensive) without expert guidance. 

You want to make sure you’re dealing with the right lender for your situation. This could involve maximising the borrowing amount or accessing the lowest rates possible. You may also need to speak with a specific lender if there are unique or complicated aspects involving the other applicants supporting your purchase.

You can see what your options are and have a free, no-obligation chat with an expert mortgage adviser below:

Connect with a JBSP mortgage specialist today

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Lenders offering this type of mortgage

You can arrange a joint borrower, sole proprietor mortgage through a fairly wide selection of lenders. However, some high street lenders like Barclays and Metro Bank might have stricter eligibility criteria or less favourable rates. 

Building societies and niche lenders, such as Skipton Building Society and Bath Building Society, might offer more favourable terms. But, because terms and rates can vary wildly based on your specific situation, it’s well worth getting a broker to show you who can offer the best deals.

Alternative options

You might want to take a look at other types of mortgages or financing methods that could be useful, depending on your circumstances:

• Guarantor mortgages: Where a parent or close family member can financially guarantee the new mortgage.
• Joint mortgages: Can be tenants in common or joint tenants where everyone will be equal legal owners or each person gets separate shares in the property.  
• Family springboard mortgages: Also known as ‘deposit boost’, are a way for UK first-time homebuyers to buy without a deposit, using family savings or property instead.

Tax implications to consider with JBSP mortgages

Because the sole proprietor (the person living at the house) will be the legal owner of the property, this is who’ll be liable to pay any Stamp Duty Land Tax (SDLT), or other eventual taxes like capital gains (CGT). 

So, the benefit of this is that it doesn’t matter if any of the other joint borrowers own properties, a first-time buyer could still qualify for stamp duty relief as the sole proprietor. So, the tax situation of the other borrowers won’t impact the process, and they’re also exempt from future capital gains calculations. 

However, it’s always worth discussing your specific tax circumstances with an expert adviser.

Advantages and disadvantages

The table below shows the pros and cons of a joint borrower, sole proprietor mortgage at a glance so you can get a clearer idea of whether it’s right for you.

Why choose Teito for your mortgage needs?

At Teito, our specialist mortgage brokers have plenty of experience with joint borrower, sole proprietor mortgage applications. This means they can guide you through the process, introduce you to the right lenders, and ensure you get the best available rates. 

We offer a free, no-obligation chat where you can discuss your situation and options with an independent JBSP mortgage broker who can help you find the most realistic and affordable solution.

Here are a few more reasons people choose us to help them find the best mortgage:

• Our brokers specialise in joint borrower, sole proprietor mortgages
• Your first consultation is free with no obligation to go any further
• We have a 5-star rating on leading review websites
• Our service will not impact your credit reports

Ready to connect with a broker who specialises in JBSP mortgages? Get started here.