This blog post has been written by the affordability experts at Tembo. Tembo specialises in helping buyers and homeowners boost their mortgage affordability through a range of schemes including Joint Borrower Sole Proprietor mortgages. In fact, on average their customers increase their budgets by £82,000! To see what you could afford with Tembo’s help, head over to tembomoney.com.
A JBSP mortgage, also known as a Joint Borrower Sole Proprietor mortgage is a type of guarantor mortgage that allows you to add a family or friend’s income to your mortgage application. Keep reading to find out how JBSP mortgages work and how they could help you get a place of your own sooner.
How does a Joint Borrower Sole Proprietor mortgage work?
At its most basic, the amount you can borrow for a mortgage is calculated using a multiple of your income plus your deposit. Typically, mortgage lenders will let you borrow between 4-4.5 times your income, although there are ways to get a bigger mortgage.
If you are buying with someone else, like a partner, friend or sibling, the amount you can borrow is based on your combined income.
So if you earn £30,000, by yourself you could be offered between £120,000 and £135,000. If you buy with your sister who also earns £30,000, you could be offered a mortgage between £240,000 and £270,000.
Through a JBSP mortgage, you can increase what you can borrow by adding a loved one to your application as a guarantor. Part of or all of their income will be added to yours to work out what you could borrow.
Say you and your sister were buying a flat and together earnt £60,000, and your Dad earns £40,000. By adding your Dad to your application as a guarantor, you could boost your borrowing up to £400,000 to 450,000.
You would still be the “sole proprietor”, meaning your Dad would not have any ownership of the property, but as a “joint borrower” he would be jointly liable for the mortgage debt. This means, if you cannot make the monthly payments, he would be required to step in.
Why get a Joint Borrower Sole Proprietor mortgage?
A JBSP mortgage is a specialist scheme that helps you increase your mortgage affordability with help from a loved one or friend, without them needing to give you any cash.
By becoming your guarantor, they can help you increase the amount you can borrow for a mortgage, helping you to get on the ladder sooner.
Plus, because they are a “joint borrower” but not a “joint proprietor”, they would not own the home with you – so you’re still the sole owner!
If later down the line your circumstances change and you can afford the mortgage by yourself - for example if you’ve had a pay rise – you can take your guarantor off the mortgage.
This makes a Joint Borrower Sole Proprietor mortgage great for buyers who are early on in their careers, so might be on lower salaries for the next couple of years but expect their earnings to rise. Or young families relying on one income, who expect to go back to being a two-income household once their children go to school.
It’s easy to see if you are eligible for a Joint Borrower Sole Proprietor mortgage . Simply head over to tembomoney.com and create a free plan with your loved one. At the end, you’ll get a free mortgage recommendation which will show you all the ways you could buy a home, including if you’re eligible for a JBSP. Get started here.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP PAYMENTS ON YOUR MORTGAGE.