Joint borrower sole proprietor (JBSP) mortgages explained

This is probably one of the biggest misconceptions we encounter. Someone might say: “My dad earns £80,000 a year, so surely adding him to my mortgage will significantly increase what I can borrow?” Potentially, yes. But not necessarily.

If you’re 28 years old and looking for a 35-year mortgage, adding a parent who’s 60 could create complications. Depending on the lender’s criteria, their age and retirement income could restrict the mortgage term. Instead of borrowing over 35 years, you might find that the available term is considerably shorter, and that can substantially increase the monthly repayments. So although the additional income might increase the maximum mortgage available, the resulting monthly payments could make the arrangement unaffordable in practice.

Some lenders have more flexible JBSP criteria than others, so it’s important to assess the actual available options rather than simply adding two incomes together. In our experience, JBSP arrangements can sometimes work particularly well where the supporting borrower is of a similar age or their age doesn’t significantly restrict the mortgage term.

Imagine your sister agrees to support your mortgage application. She doesn’t currently own a property and has no immediate plans to buy. However, three years later she meets someone, settles down and wants to purchase a home of her own. The problem is that she’s already named on your mortgage.

Even if you’ve made every payment yourself and your sister has never contributed a penny, another lender may still take that existing mortgage commitment into account when assessing her affordability. This could reduce how much she’s able to borrow, or potentially prevent her from obtaining the mortgage she needs.

What are your plans for the next five or ten years? Do you intend to buy your own property, move home, start a family or take on additional borrowing? If the answer to any of those questions is yes, you need to understand how the JBSP commitment might affect those plans.

This is arguably the biggest risk for the supporting borrower. You’re legally responsible for the mortgage debt, but you don’t automatically have any ownership rights over the property. If the property increases significantly in value, you don’t automatically benefit from that increase. However, if the mortgage payments aren’t maintained, you can still be pursued for the debt.

Mortgage arrears or missed payments could also affect your credit record. A joint mortgage links your credit file with the owner’s too, so lenders may look at their credit history when you apply for credit yourself. That’s a considerable responsibility to take on, particularly when you’re helping someone close to you.

It’s easy to overlook this when everybody gets along and the intention is simply to help someone buy their first home. But circumstances change. What happens if the supporting borrower wants to buy a house with their partner and can no longer afford to remain on the existing mortgage? What if the property owner can’t afford to remortgage in their own name? What if the owner loses their job or stops making payments?

These situations can create considerable financial pressure and potentially damage family relationships. We always think it’s important that everyone understands the commitment before proceeding.

One of the things we encounter when researching JBSP mortgages is that some lenders only offer them for property purchases, not remortgages. So although a lender might be happy to offer you a JBSP mortgage when you first buy, another lender might not accept you when you want to remortgage a few years later.

For example, imagine you’ve taken out a five-year fixed-rate JBSP mortgage with the help of a parent. Five years later, your income still isn’t sufficient to support the mortgage on your own, so you need your parent to remain on it. Ordinarily, you’d want to compare remortgage deals across the market, but because you’re still reliant on the JBSP arrangement, the number of lenders willing to consider your remortgage could be considerably smaller.

You could find yourself effectively restricted to your existing lender, particularly if they offer a product transfer but you cannot meet another lender’s criteria. That doesn’t necessarily mean you’ll be stuck paying the lender’s Standard Variable Rate (SVR): your existing lender may allow you to switch to another of its products. However, it could mean you have significantly less choice and potentially miss out on more competitive deals elsewhere.

Before taking out a JBSP mortgage, don’t just consider whether it helps you purchase the property today. Think about what your mortgage options might look like in two, five or even ten years’ time.

If the property owner dies, becomes seriously ill or can’t work, the mortgage still has to be paid, and the supporting borrower is still responsible for it, even though the property belongs to the owner. That’s why we talk about protection as part of arranging a JBSP mortgage: life insurance to repay the mortgage, and income protection or critical illness cover to help keep the payments going. Protection and insurance.

We’re sometimes asked whether a JBSP mortgage can help when a couple are buying together and one of them already owns a property that hasn’t sold yet.

It isn’t straightforward. Who owns the property, who’s on the mortgage and how that changes later can all affect stamp duty and other taxes, and there are special rules for married couples and civil partners. Changing the ownership or the mortgage later can also mean legal costs, lender restrictions and fresh affordability checks.

We don’t provide tax advice. If you’re considering any arrangement like this, get advice from a qualified solicitor or tax adviser on whether your set-up is correct before you go ahead. Don’t assume a particular structure will deliver a tax saving.