With the average house price in the UK nearing £300,000, affordability remains a sticking point for many prospective homebuyers, particularly those trying to buy on their own.
Despite some mortgage lenders offering greater flexibility with high loan-to-values (LTVs) and loan-to-income (LTI) ratios, for some would-be borrowers, their income simply doesn’t stretch far enough to keep up with rising property prices.
However, a Joint Borrower Sole Proprietor (JBSP) mortgage may be able to give borrowers the affordability boost they need. This type of mortgage allows up to four incomes to be combined on a single mortgage application, with only one person – the sole proprietor – being the legal owner.
As the market continues to look for ways to help borrowers with affordability, at Dudley Building Society, we believe JBSP mortgages currently present an untapped opportunity for both brokers and their clients.
WHO MIGHT BENEFIT FROM A JBSP MORTGAGE
When it comes to JBSP mortgages, family members are a natural fit due to the strong relationships already in place, whether it’s parents helping their children or adult children assisting their parents. The ‘Bank of Family’ is playing an increasingly larger role in the mortgage market through gifted deposits, and in many ways, JBSP mortgages are an extension of this intergenerational gifting trend.
Gifting hit a record high of £9.2bn in 2024, according to research by Legal & General, with contributions from parents and grandparents expected to reach £11.3bn by 2026. A JBSP mortgage can act as an alternative to a gifted deposit, especially if the family members don’t have a lump sum to give or prefer to spread out their contribution.
A typical scenario might involve parents who have either paid off their mortgage or are close to doing so and want to use their income – whether from employment or retirement – to help their son or daughter get onto the property ladder. By including the parents’ income in the affordability assessment, the amount the applicant can borrow through a JBSP mortgage may increase.
For example, we’ve helped a student with no income of their own buy a property near their University with the support of their parents through a JBSP mortgage. Taking a flexible, case-by-case approach allowed us to help the student begin their property journey while studying, while also saving the parents from the cost of renting student accommodation.
SUITABLE FOR COMPLEX INCOMES
JBSP mortgages are also an option for borrowers with complex income sources, such as those with a second job, multiple pensions, savings, or property income.
They can work well for expats looking to help family or friends purchase a home in the UK. For example, an expat couple living in Dubai could use their foreign income to support their son or daughter in buying a home in the UK through a JBSP mortgage. Since Stamp Duty (SD) is assessed on the sole proprietor, the additional second home SD rate wouldn’t apply, even if the parents already own property, as they wouldn’t be named on the property’s deeds.
Vice versa, if the son or daughter is a High-Net-Worth (HNW) expat living abroad, they might want to use some of their income to help their parents in the UK buy a more suitable retirement property. If they’re entrepreneurial, they may have multiple income streams and assets, all of which a personalised underwriting approach could consider to help with their parents’ affordability. A wider family member, or even non-family members, might also be considered for a JBSP mortgage.
The same principles apply to buy-to-let investors. Whether it’s an expat helping a family member in the UK, or a family member in the UK supporting their son or daughter with buy-to-let affordability, JBSP mortgages offer flexibility for a variety of situations.
LEGAL CONSIDERATIONS
While JBSP mortgages can be a great option for the right client, there are a few things to keep in mind.
Since both joint borrowers and the sole proprietor are legally responsible for the mortgage repayments, it’s recommended for them to seek independent legal advice, in order to protect everyone involved. It’s also a good idea for borrowers to plan ahead for when someone might want to be removed from the mortgage agreement – whether through remortgaging, selling the property, or another route.
Even though JBSP mortgages can be more complex than a standard residential mortgage, they can be well worth the effort, especially when they help a client secure the property they want.
At Dudley Building Society, we aim to make the process as straightforward as possible. Our underwriters are available to offer guidance and support, helping to simplify the process and make it easier for both brokers and borrowers to access this innovative product.
