It comes with risks, he suggests, but some industry colleagues disagree
A new addition to the market in recent years, the joint borrower sole proprietor – or JBSP - mortgage has been heralded by some as a lifeline for those struggling to get on to the property ladder, enabling them to buy with the help of up to four people, usually including their parents. Combining applicants makes it easier to qualify for a mortgage, of course, but only one person owns the property.
In principle it may seem like a reasonable solution, but Bob Singh (pictured left), director of Chess Mortgages, who has around 41,000 followers of his TikTok advice account, The Mortgage Maharaja, has called for a rethink of the solution, though lender Family Building Society defended it, saying it can be “the right solution in the right circumstances.”
While accepting that JBSP has its place when used as originally intended, Singh suggested that it can now involve people who shouldn’t be part of the loan, and comes with risks which the participants won’t have thought through. “The product needs some further thought,” Singh told Mortgage Introducer: “The vulnerable person in this equation is not only the owner but also the joint borrower who may not realise the depth of commitment being asked of them. It was a product designed for parents to support their child and use their excess income or all of it to support a mortgage application, and some lenders do restrict to just parents. It wasn't designed for other family members or friends who have no intention of contributing towards the mortgage even if called upon to do so. Why should they when they derive no benefit from the property? That leaves the owner, whose name is on the deeds, ultimately left holding the baby.”
Singh acknowledged that JBSP enables a higher loan to be approved than that would otherwise be available to the borrower on their sole income, but the payments are much higher, he suggested, and may be difficult to afford on their own. “Many joint borrowers think it's just a guarantee, that they will pay if the main borrower can't and hope or pray it never happens, but they often may not fully understand that they are primarily responsible too,” he said.
This, Singh noted, is something that Independent Legal Advice (ILA) would highlight, but he doesn’t feel that this is properly taken onboard, and people may go ahead anyway not to risk jeopardising their relationship with the borrower. “Unmarried partners should be excluded as this is often a route to avoid Stamp Duty,” he said. “In the event of a breakup, the owner will be left in financial difficulties and have to resort to sub-letting or selling prematurely, facing early redemption charges and damage to their credit files if they are late with payments or miss some. It would be interesting to see how these mortgages perform.”
Read more: How the mortgage industry needs to change
What alternative is there to Joint Borrower Sole Proprietor?
“I feel we should offer the traditional ‘guarantee’ system without the guarantor being named on the mortgage,” Singh said. “This could be limited to a certain amount or percentage of the monthly payment.”
Having a joint borrower named on a mortgage means they have a credit file entry which gets taken into account for their future mortgage applications, Singh noted. He also urged that mortgage advice regarding a JBSP should be in person and not via a remote meeting, to avoid any undue pressure from a prospective owner, and there should be a cooling off period. Other enhancements, he suggested, could be a consent to let if the remaining borrower can't repay the mortgage, and the opportunity to switch to a buy-to-let after the end of a rate. Payment holidays in the event of a relationship split, without affecting the borrowers’ credit file, would give the parties involved the time to resolve what to do with a property, he added.
Darren Deacon, head of intermediary sales at Family Building Society, which offers JBSP arrangements, suggested that brokers have a key role to play in ensuring that all parties involved in the mortgage are across the detail. “In our experience we find that the JBSP arrangement can be the right solution in the right circumstances,” Deacon commented. “Like all instances where family help is required either in a JBSP arrangement or when gifting a deposit, it’s important that all parties fully understand the commitment that the borrower and their family are entering into. This is where the broker can play a vital part in the process to ensure no misunderstanding or nasty future surprises.”
There was support for the solution from some in the broker community. Richard Campo (pictured second from left), head of growth at Heron Financial, said he had recommended many JBSP mortgages and had no hesitation in doing so in the future. “Many people do not marry now, and what is the harm helping a loved one buy a home, whether there is a family link or not?” Campo declared. “I would be very sad to see JBSP restricted to a parent/child relationship and it would rule out the many positive situations where this can be used – divorcing partners, siblings and friends helping one another. That also overlooks that this is also used for children to support parents these days as well – the fundamental use of this scheme is to get more people on to the property ladder and keep others in their home. Surely that is better than forcing someone to sell in a stressful situation or not buy at all?”
Mortgage advisers can’t give advice on Stamp Duty issues, Campo noted, unless they are a qualified accountant or conveyancer, and most lenders insist on Independent Legal Advice before entering into a JBSP contract. “From a technical perspective it isn’t a product, in most cases, but a criteria offering, as the majority of lenders that offer JBSP mortgages do so on standard products, which again, to me, suggests there is no more risk in these cases than any other mortgage,” he commented. “At a time where it is so hard to buy, why on earth would we rule out an avenue that helps many people achieve one of life’s main goals?”
Broker Serena Smith (pictured second from right), from Mortgages with Serena, also disagreed with the concerns raised over JBSP, and said she had taken advantage of a similar arrangement herself, because at the time she bought her property she was newly self-employed. “No-one believed it was possible to sustainably grow my business as I did,” Smith explained. “Oh, how I proved them wrong!” She is planning to remove the joint borrower when she remortgages this summer.
Meanwhile, Kim Balasubramaniam (pictured right), co-founder & director of advice firm Versed, said it had not had much call for these mortgages, but knew they were popular. “For the right client they are an interesting proposition and can help tip the scales in terms of affordability,” she said. “It’s absolutely vital though that both parties fully understand the product and its complexities, and that the joint borrower gets independent legal advice before committing to the mortgage.”
Claire Towe (pictured far right), co-founder at Meet Margo, believes homeownership shouldn’t be out of reach just because traditional lending doesn’t reflect real-life situations. JBSP mortgages can be a lifeline—especially for those navigating separation or financial hardship, she said.
“We've seen firsthand how impactful this option can be,” Towe commented. “We helped a woman fleeing economic abuse stay in her home with her children through a JBSP mortgage. Another client, a single mum living with her ex, was able to buy her own home with support from her stepdad. These are real stories that show how vital flexible mortgage options are for those facing challenging situations. Many of the clients we support with JBSP products can comfortably afford mortgage repayments - often lower than their rent - but affordability rules block them from buying on their own. JBSP gives them a path to homeownership they wouldn’t otherwise have.
“Of course, advisers must ensure all parties fully understand the commitment, and let's not forget joint borrowers are required to get independent legal advice. There should be no ambiguity, they’ll know exactly what they’re signing up for. JBSP isn’t a loophole, it’s a necessary option. With the right safeguards, it provides a real solution for those who need it most."
