The following aims to be a straightforward guide in relation to JBSP mortgages. The acronym, JBSP stands for Joint Borrower Sole Proprietor mortgages.
What are JBSP mortgages?
Generally speaking, the majority of mortgage lenders will require all borrowers to be named on both sets of paperwork – the Official Copy Entries (the property documents) and the Mortgage Deed (the mortgage documents). This provides the most comprehensive protection for the lender in case things go wrong and they need to take possession of the property.
A JBSP mortgage is a unique type of mortgage as it enables you to have different names on the property documents and the mortgage documents.
Why would one need a JBSP?
JBSP mortgages are really very useful for first time buyers.
According to Go Compare at least a third of your monthly net income will go straight towards mortgage payments as a first-time buyer where you have taken out a 90% loan to value mortgage. You will, of course, also need to save up to put down a 10% deposit on exchange of contracts. This can be really challenging, especially when the average house price in the UK continues to rise each month and when salaries are not rising in line with inflation.
This is where a JBSP mortgage can come in handy. Under normal circumstances, a 25-year-old might not earn enough or be able to save enough of a deposit to borrow the amount that they need from a lender to purchase their first home. Most parents across the UK know how hard it is for young people to get on to the property ladder and want to help. With a JBSP mortgage, the young person’s parent or close family member can be classed as a borrower under the mortgage documents whilst only the young person’s name is on the property documents. The young person owns the property, but mum or dad and the young person are jointly and severally liable for the amount lent under the mortgage, which lowers the risk to the lender.
Are there any specific criteria that one needs to meet to get a JBSP?
The person who is planning on supporting the young person’s mortgage application needs to be a relative, the young person must not already own other properties and they must be the one living in the property. All borrowers will also need to meet the lender’s standard conditions as the lender will have a range of requirements as to age limits, income and credit ratings, for example. This may prove to be restrictive with older relatives and other options for support may prove more appropriate.
Is there anything that the relative supporting the young person’s application must do?
The family member will need to seek https://www.parachutelaw.co.uk/joint-borrower-sole-proprietor-mortgage-legal-advice joint borrower sole proprietor mortgage legal advice from a solicitor who is independent to the purchase transaction. Seeking joint borrower sole proprietor mortgage legal advice will make sure that the relative understands that although they are not going to own the property or have any legal claim over the property whatsoever, they will be jointly and severally liable for the amount borrowed under the mortgage. This is why joint borrower sole proprietor mortgage legal advice is so important.
The main advantages to a JBSP mortgage
1. Family members can help you get on the property ladder or buy a larger home
2. You can access a larger range of mortgage deals
2. Family members can be removed from the mortgage when you start earning more
3. There is no stamp duty liability for the family members
