The affordability challenges facing first-time buyers and other aspiring home purchasers has been well documented over the years. Increasing house prices and difficulties raising a deposit have been cited as barriers to purchase for many trying to get on the property ladder. This is why the Joint Borrower, Sole Proprietor (JBSP) scheme has become increasingly popular. Being able to add a family member or a friend onto the mortgage, whilst still retaining sole legal ownership of the property has helped many overcome the affordability challenges.
Joint Borrower, Sole Proprietor is a type of mortgage whereby not all parties named on the mortgage become legal owners. This allows parents, for example, to get on the mortgage which makes the loan more affordable.
Key Highlights
- Some lenders do not restrict the relationship between the main borrower and the supporting borrower. The supporting borrower can be family or even a friend!
- Up to 4 applicants can be accepted and up to all four incomes used. Maximum loan to value (LTV) of 95% can be considered. Which means you’ll just need a 5% deposit. If you’re a first time buyer and the person supporting your applicant has a property or has had one in the past, you’ll still be able to access the first time buyer incentive on stamp duty.
- Available for purchase/remortgage in England, Wales and Scotland.
Worked Example
- You earn £35,000 a year.
- Most lenders will apply a multiple of 4.5 x annual salary to decide how much they can loan.
- This would mean you may be able get a loan of £157,500.
- If however, the person supporting your application on a Joint Borrower Sole Proprietor basis, earns £20,000 a year. You’ll now be able to get a loan of £247,500.
- This is an indicative example. Standard lending policies respective to lenders apply
