What is a JBSP Mortgage?
A Joint Borrower Sole Proprietor Mortgage is often referred to as a JBSP mortgage. It is a form of home loan that enables two people to borrow money together whilst only one of them is named on the mortgage.
Why is this useful? Well, this type of mortgage can help people who want to purchase a property but do not have the necessary funds for a deposit, or possibly those who have bad credit and need someone with good credit to co-sign the loan.
The primary use of a JBSP mortgage is to help young people get onto the property ladder. It can help in securing a mortgage as well as potentially increasing the scope of borrowing. By allowing individuals to accept financial support from family, whilst still retaining the independence of a sole property ownership, a JBSP mortgage offers many benefits.
The Differences of a JBSP Mortgage and Other Loans
The main difference with a JBSP mortgage is that both borrowers are legally responsible for repaying the debt. What this equates to is that if one borrower does not make payment, the other borrower automatically becomes liable for the full amount.
With a joint mortgage however, you buy a home jointly with someone else, whether that is a partner, relative or friend, and you therefore share the property ownership and the subsequent financial responsibilities. Both parties are equally responsible for repaying the mortgage, and each have a legal claim to the property ownership.
In contrast to this, with a JBSP mortgage, the other applicant (which is usually a parent), takes on joint responsibility for the debt and repayments but has no legal claim to the property.
Guarantor Mortgage
A guarantor mortgage has very few similarities to a JBSP mortgage. The only comparable feature is the fact that parents have no legal claim to property ownership with either mortgage. Parents only become responsible for the debt with a Guarantor mortgage if their child is unable to meet the repayments. In contrast, with a JBSP mortgage the other applicant agrees to contribute towards the mortgage repayments from the start.
Multiple Incomes
For the majority of mortgages only two incomes are considered with any others being referred to as additional financial guarantees. For a JBSP mortgage however, the lender will consider up to four applicants but this figure can differ between providers.
The borrowing amount will depend upon lending criteria and differences in applications. In general, for a JBSP mortgage, the majority of lenders will cap your potential borrowings to 4.5 times the combined income.
Downfalls of a JBSP Mortgage
The main risk associated with a JBSP mortgage is if the named person on the mortgage defaults on the loan, the other person is then still responsible for repaying the debt. This can become extremely difficult and create financial problems for both parties involved.
Need More Information?
Whilst a JBSP mortgage can be great in helping family members purchase a home, a guarantor mortgage or a housing scheme could also offer many benefits. For advice on these mortgages to help you make an informed decision contact Transparent Mortgage Services on 01424 444 597 or email us on email info@tms-fs.co.uk.
