Joint Borrower Sole Proprietor (JBSP Mortgage)

How does a JBSP mortgage work?

Not just for first-time buyers, a JBSP mortgage can be used for any residential application as well as to purchase a buy-to-let property. You may have just started your career and have a low starting salary, you may be self-employed with an irregular income or your salary may simply not be sufficient when applying for a mortgage on your own. Combining your income with someone else’s increases your affordability and maximises your borrowing potential. This either helps you to get on the property ladder as a first-time buyer or move up it if you’re an existing homeowner and want to remortgage so that you can buy a better property. You can also combine your savings to put down a bigger deposit. When purchasing a buy-to-let property with someone else, a JBSP mortgage has tax advantages. Whilst both of you make the monthly mortgage repayments, the property can go in the name of the person with the lowest income, helping to reduce your tax bill.

As mentioned above, up to four applicants can apply. This significantly boosts your affordability and means the mortgage repayments are made between you all even though you are the only legal owner of the property. Bear in mind that not all lenders take each applicant’s income into account — some only consider the incomes of two applicants. An income multiplier of 4.5 is generally used to determine the amount a lender is prepared to offer you. If you have a salary of £30,000, for example, a lender may offer you £135,000 when buying a property on your own with a standard residential mortgage. Should your parent agree to a JBSP mortgage and have a higher salary of £45,000, however, you could potentially buy a property up to a value of £337,500.

An upper age limit at the time the mortgage term ends is set by lenders, which is usually 75 years old but some lenders allow for an age of 80. This may restrict you if the person you wish to apply for the mortgage with is likely to be too old at the point of application. It’s also important that you trust each other completely as you are jointly responsible for making the mortgage repayments. This means that if one of you is unable to pay your share, the other is legally liable. If a mortgage payment is missed or a late payment is made, both of your credit scores will be negatively affected – regardless of whose fault it is – as you have a financial association with each other. Also, lenders usually require that the property owner lives in the property but that none of the other borrowers do

The advantages and disadvantages of a bad credit mortgage

If you’re unsure as to whether you should apply for a bad credit mortgage or not, weigh up the advantages and disadvantages detailed below. Our specialist mortgage brokers for bad credit are also on hand to discuss your concerns and help you make the right decision.

Advantages

• You can own a home sooner rather than later. Rather than waiting until your credit issues have been resolved, you can get on the property ladder straight away.
• Your credit score will start to increase. As you make your monthly mortgage repayments, your credit score will improve. In time, you’ll be able to remortgage to a better deal.
• There’s still a choice of mortgage deals. Although there are fewer mortgage options to choose from when you have bad credit, there are more deals available when your credit issues are minor ones. Our mortgage brokers also have access to deals that are only available through brokers so you’ll benefit from a wider selection.
• You can take advantage of the current prices. By purchasing a property now, you’re not risking having to pay a higher price should the market gain momentum in the future.

Disadvantages

• You have to pay a bigger deposit. Lenders require you to pay a larger deposit than would be needed if you had a good credit history. This is because your bad credit status poses more of a risk for them.
• You’ll be charged a higher interest rate. Just like having to pay a bigger deposit, you’ll be charged a higher interest rate by the lender. This helps to counteract the risk they’re taking by offering you a bad credit mortgage. As there aren’t as many bad credit mortgage deals compared with standard ones, the rates also aren’t as competitive.
• There’s a limited choice of mortgage deals. The range of deals you can choose from is smaller due to your bad credit status.
• There’s no time to increase your credit score. If you want to buy a property straight away, there’s no opportunity to build up your credit score. If you’re able to wait, however, you can improve your score and benefit from better mortgage deals as a result.

We can help you apply for a bad credit mortgage

We understand how hard and demoralising it can be to find a mortgage when you have a poor credit rating. Whilst it is challenging, it is possible and we are here to help you with that. There’s certainly no need to go it alone when trying to secure a mortgage with bad credit. With years of experience and working with numerous lenders, our mortgage brokers can take the stress out of the application process for you. They are highly experienced in arranging poor credit mortgages and can look at various ways to strengthen your application. When you’re ready to proceed, they’ll present your application to the best mortgage lender for bad credit to suit your situation.

As one of the leading mortgage brokers in Kent and with mortgage advisers located throughout London and Edinburgh, we have many resources at our fingertips to help secure a mortgage for you. Simply reach out to our specialist mortgage brokers for bad credit on 01322 907 000 and let us take care of the rest.

Our expert brokers are available to discuss your concerns and review your circumstances. They can offer advice on how to improve your credit score and compare your credit issues against different lenders’ criteria. With access to broker-only mortgage deals, you can rest assured that you’ll benefit from the best deals available. If it’s out of office hours, just send us an email at info@trinityfinance.co.uk or an enquiry via our contact form. We’ll reply to you as quickly as possible with further bad credit mortgage information.

Stamp duty benefits

When buying a property as a first-time buyer, you are exempt from paying stamp duty up to the property value threshold of £300,000. If the person entering into the JBSP mortgage with you is already a homeowner, they are exempt from the second property stamp duty surcharge as they are not a legal owner of the property. The stamp duty surcharge is 3% so a JBSP mortgage saves a considerable amount of money in this respect compared with other mortgage types, such as a joint mortgage.

The first step towards your future goal

The purpose of a JBSP mortgage is to enable you to buy a property when you’d struggle to do so on your own with the goal of taking full responsibility for the mortgage when you’re able to. If your circumstances change, such as receiving a salary increase, and you can afford the repayments on your own, then you’re expected to remortgage. This can either be with the same lender or a new one if you prefer. The other borrower can then be released from their responsibility for paying the mortgage. This arrangement allows someone to help you buy a property on the understanding that it’s on a temporary basis and they’ll be released from their commitment when you can afford to take over completely. The lender will usually expect you to provide an explanation of how you intend to make the repayments on your own in the future.

To get started with your application, just give us a call on 01322 907 000. Our expert mortgage brokers are ready to ascertain how much you can borrow and arrange a mortgage in principle for you. Located throughout Kent, London and Edinburgh, our mortgage specialists have unrestricted access to the market, ensuring you benefit from the most competitive deals available. At Trinity Finance, we also offer other home-buying services you may wish to take advantage of, such as arranging your home insurance and mortgage protection cover. If you’re unable to give us a call, send us an email at info@trinityfinance.co.uk or an enquiry via our contact form and we’ll reply to you as quickly as possible with more information.

The pros and cons of JBSP mortgages

As with any mortgage, there are pros and cons to consider and we’ve detailed them below for you.

Pros

• Get on or move up the property ladder with the increased affordability that another borrower provides.
• Combine your savings to pay a bigger deposit and benefit from better interest rates. The more you can put down, the lower the loan-to-value (LTV) ratio will be and, in turn, the lower the interest rates.
• Despite having help with the mortgage, you will have sole ownership of the property.
• If the other borrower is a homeowner, they won’t be charged a second property stamp duty surcharge.
• You aren’t restricted to buying a certain type of property, which you are with some government-backed schemes. For example, you can only buy a new-build property if you apply for the Help to Buy: Equity Loan scheme.
• This type of mortgage can be used for a residential or buy-to-let property.
• Intended as a temporary mortgage solution, you can remortgage when your circumstances change for the better and the other borrower can be released from their commitment.

Cons

• Each borrower is jointly and severally liable for the mortgage repayments.
• Whilst being financially committed, the other borrower won’t have ownership of the property or benefit from any financial gain, such as a share of the profit if you sell the property in the future.
• If any mortgage repayments are late or missed, both of your credit ratings will be affected.
• You can’t apply for financial assistance via one of the government-backed schemes with a JBSP mortgage.
• The age limit set by the lender may affect the other borrower’s eligibility.
• Being financially obligated to a JBSP mortgage, the other borrower may have difficulty getting another loan