With house prices remaining high relative to the average first time buyer salary, many people are finding that the mortgage they can get in their own name simply does not stretch far enough. A joint borrower sole proprietor mortgage - often referred to as a JBSP mortgage - is one of the ways families are bridging that gap, and it is becoming an increasingly popular solution.

This guide explains how a JBSP mortgage works, who it suits, and what the key considerations are before going down this route.

What is a joint borrower sole proprietor mortgage?

A JBSP mortgage is one where multiple people are named on the mortgage - and therefore jointly responsible for the repayments - but only one person is named on the title deeds as the legal owner of the property.

The most common arrangement is a parent and child applying together. The child is both a borrower on the mortgage and the sole proprietor of the property. The parent is a borrower on the mortgage - meaning their income is taken into account when calculating how much can be borrowed - but they have no legal ownership of the property.

How is a JBSP mortgage different from a standard joint mortgage?

With a standard joint mortgage, all borrowers are also named on the title deeds. They each own a share of the property and are jointly liable for the debt.

With a JBSP mortgage, the supporting borrower - typically a parent - shares the financial responsibility but has no ownership stake. They do not appear on the title deeds and do not acquire any interest in the property.

This distinction matters for several reasons, which are explained below.

Why would a parent use a JBSP mortgage rather than a standard joint mortgage?

The main reason is stamp duty. Since April 2016, anyone who already owns a property and buys a second one - including purchasing jointly with a child - has been subject to an additional stamp duty surcharge on top of the standard rates. By using a JBSP mortgage instead of a joint mortgage, the parent does not appear on the title deeds and therefore does not trigger the surcharge, which can save a significant amount of money on higher value properties.

There can also be capital gains tax implications when a jointly owned property is eventually sold, particularly if the parent already owns their own home. Again, because the JBSP parent has no ownership interest, these do not arise in the same way.

It is important to take independent tax and legal advice on your specific situation, as the rules in this area can be complex and individual circumstances vary.

How does the borrowing work?

In a JBSP arrangement, the lender assesses the combined income of all borrowers when calculating the maximum loan. So if a first time buyer earns £28,000 and their parent earns £45,000, the lender may calculate affordability based on both incomes - potentially allowing the buyer to access a significantly larger mortgage than they could manage alone.

Not all lenders offer JBSP mortgages and those that do have varying criteria around age limits for the supporting borrower, the maximum number of borrowers, and how they treat existing financial commitments. A whole-of-market broker can identify which lenders are most likely to accept the application and on what terms.

Who is responsible for the mortgage payments?

All borrowers named on the mortgage are jointly and severally liable for the repayments. This means that if the primary borrower - the child - misses a payment or cannot keep up with the mortgage, the lender can pursue the supporting borrower for the full amount. The parent is not simply a guarantor in name - they are a full borrower, and missed payments will affect their credit file as well as the primary borrower's.

This is something both parties need to understand clearly before proceeding. It is a significant financial commitment for the supporting borrower, and it should be treated as such.

Does the supporting borrower's existing mortgage affect the application?

Yes. If the parent has their own residential mortgage, the lender will factor in that commitment when assessing overall affordability. Some lenders will require that the combined mortgage obligations remain within a reasonable level relative to the supporting borrower's income. In practice this means that a parent with a large outstanding mortgage of their own may not be able to support their child's application as effectively as one who owns their home outright.

When does the supporting borrower come off the mortgage?

The supporting borrower can be removed from the mortgage at a later date - typically when the primary borrower's income has grown to the point where they can support the mortgage on their own. This would involve a remortgage into the primary borrower's sole name. There is no set timeframe for this - it happens when both the primary borrower and the lender are satisfied that the solo application is viable.

Is a JBSP mortgage the right solution?

It can be a very effective tool for the right family in the right circumstances. It works best where the primary borrower has a stable income that is expected to grow, where the supporting borrower has sufficient income and a clean credit profile, and where the stamp duty saving makes a meaningful difference to the overall cost.

It is not the only option for parents wanting to help children onto the property ladder - gifted deposits, guarantor mortgages, and family offset mortgages are all alternatives worth considering alongside JBSP. A good adviser will walk you through all the options and help you work out which approach makes most sense for your family's situation.

How Aspect Mortgages can help

The team at Aspect Mortgages are independent whole-of-market advisers with experience in helping first time buyers and their families find the most suitable mortgage solution. If you are considering a JBSP mortgage or want to explore the alternatives, we will give you straightforward, honest advice about what is available and what is likely to work for your circumstances.

Call us on 01257 812345 or visit our first time buyer page to get started.