Guarantor Mortgages

What was once known as a Guarantor Mortgage now takes on a few different names in its modern guise.

• Joint Borrower, Sole Proprietor (JBSP)
• Family Backed Mortgage
• Parental Assistance Mortgage

These terms all refer to the same thing. A mortgage whereby somebody is helping someone else to obtain a mortgage.

Getting on the property ladder is tough. House prices and strict affordability checks mean that even with a good income, the mortgage you need can feel just out of reach. A Joint Borrower Sole Proprietor (JBSP) mortgage could be the key that unlocks your new home .

This innovative product is changing the way first-time buyers and families think about affordability .

What is a JBSP Mortgage?

A JBSP mortgage is a type of home loan that allows you to boost your borrowing power by combining your income with one or more other people, typically parents or close family members.

The unique aspect of a JBSP mortgage is the legal ownership structure:

• Joint Borrowers: You and your supporters (e.g., your parents) apply for the mortgage together. All of you are legally responsible for making the monthly repayments .
• Sole Proprietor: However, only you are named on the property’s title deeds as the legal owner. The other borrowers are helping you pay for the home, but they do not own it .

This setup means your family can provide crucial financial support without the complications of being a co-owner.

How Does It Work?

Imagine you’re a first-time buyer with a salary of £30,000. On your own, a lender might only offer you around £120,000-£135,000. In many parts of the UK, that’s not enough to buy a home.

With a JBSP mortgage, you could add your parent’s £40,000 income to the application. The lender would then assess your combined income of £70,000, potentially giving you access to a mortgage that is large enough to buy a suitable property . You make the monthly payments, but both you and your parents are liable for the debt.

Who Can Benefit from a JBSP Mortgage?

This type of mortgage isn’t just for one type of person. It’s a flexible solution for a variety of situations .

• First-Time Buyers: The most common use case. Young professionals with strong career prospects but currently modest salaries can get a foot on the ladder with parental help.
• Young Professionals: If you’re at the start of your career and expect your earnings to rise, a JBSP mortgage allows you to buy now, with the goal of removing your supporters from the mortgage in a few years once your income has increased.
• Single Applicants: Buying alone can be difficult. A JBSP mortgage lets a single person combine their income with a parent or friend to secure a larger loan amount.
• Friends Buying Together: It’s not just for family. Some lenders allow friends to use a JBSP structure to buy a home together, with one named as the owner, or both as joint tenants if that suits their situation.
• Helping a Family Member in Difficulty: As one real-life example shows, a JBSP mortgage can even help a divorcing parent keep the family home by having an adult child join the mortgage as a supporter.
• Reverse JBSP: Later in life, adult children and friends can assist borrowers limited on their affordability by a modest pension income. This is commonly referred to as ‘Reverse JBSP’ given the product is most commonly used for parents helping kids. Increasingly, it’s kids helping parents.

The Key Benefits

Boost Your Borrowing Power

This is the main advantage. By pooling incomes with a supporter, you can significantly increase the amount a lender is willing to offer, opening up a much wider range of properties.

Preserve First-Time Buyer Status

Since your parents (or other supporters) are not on the deeds, they do not become property owners. This means you retain your first-time buyer status for stamp duty purposes. Crucially, your parents avoid the 3% stamp duty surcharge that applies to buying an additional property .

No Ownership Complications

The supporter is helping with the finances, but has no legal claim to the property. This keeps things simple for inheritance, selling the home in the future, and ensures you have full control over your home .

A Path to Sole Ownership

Most JBSP mortgages allow for the removal of the supporting borrowers in the future. Once you can afford the mortgage on your own—typically at the end of your initial fixed term—you can remortgage in just your name, subject to affordability checks .

Important Considerations and Risks

A JBSP mortgage is a powerful tool, but it requires complete trust and a clear understanding of the responsibilities involved.

Shared Financial Liability

This is the most critical point. All borrowers are jointly and severally liable for the full mortgage debt. If the main occupier misses a payment, the lender will pursue the supporters for it. Missed payments will also impact everyone’s credit score.

Limited Lender Availability

While growing in popularity, JBSP mortgages are still a specialist product. Not all high-street lenders offer them, so working with a broker who knows the market is essential.

Independent Legal Advice is Mandatory

To ensure that all parties fully understand the commitment, lenders require the non-owning supporters to seek independent legal advice from a solicitor separate to the one handling the property purchase. This is an additional cost to factor in, usually around £500 to £700.

Is a JBSP Mortgage Right for You?

A JBSP mortgage is an excellent solution if you have a supportive family or friend network and a clear plan for the future. It works best when:

• You have a reliable income but not enough to borrow what you need.
• Your supporters are financially stable and trust you to make the payments.
• Everyone goes into the arrangement with their eyes open about the financial and legal responsibilities.

If you’re ready to explore whether a JBSP mortgage can help you buy your dream home, speak to one of our advisers’ today. They can help you navigate the lender criteria, find the best deal, and ensure this innovative product is the right fit for your circumstances.