What is a joint borrower sole proprietor mortgage?
A Joint Borrower Sole Proprietor (JBSP) mortgage is a type of mortgage that allows two people to apply for a mortgage together, even if only one person will be named on the title deeds of the property. This means that the person who is not named on the title deeds will not own any part of the property, but they will still be legally responsible for repaying the mortgage.
Here are some of the pros and cons of JBSP mortgages:
Pros:
- Easier to get a mortgage: JBSP mortgages can be easier to get than traditional mortgages, as they offer lenders a lower risk. This is because the lender is only lending to one person, even though two people are applying for the mortgage.
- Can borrow more money: JBSP mortgages can allow borrowers to borrow more money than they would be able to if they were applying for a mortgage on their own. This is because the lender is taking into account the income of both borrowers, even though only one person will be named on the title deeds.
- Retain sole ownership: One of the main benefits of a JBSP mortgage is that the person who is not named on the title deeds will not own any part of the property. This means that they will not have any say in how the property is managed or sold.
- No additional stamp duty: If the person who is not named on the title deeds is a close relative, such as a parent or sibling, they will not have to pay any additional stamp duty when the property is purchased.
Cons:
- Joint responsibility: All borrowers on a JBSP mortgage are jointly responsible for repaying the mortgage. This means that if one borrower falls behind on their payments, the other borrower will also be liable for the debt.
- Credit checks: All borrowers on a JBSP mortgage will need to pass a credit check. This means that if one borrower has a poor credit history, it could affect the chances of the other borrower getting a mortgage.
- Mortgage term: The mortgage term on a JBSP mortgage may be shorter than the term on a traditional mortgage. This is because lenders are taking into account the age of the borrower who is not named on the title deeds.
Is it the right option for you?
JBSP mortgages can be a good option for people who are struggling to save for a deposit, or who have a low income. However, it is important to weigh up the pros and cons before deciding if a JBSP mortgage is right for you.
If you are considering a JBSP mortgage, it is important to speak to a mortgage advisor who can help you understand the different options available to you and find the best mortgage for your needs.