What is a joint mortgage, sole proprietor arrangement?

Full answer

A joint mortgage, sole proprietor arrangement (sometimes called a joint borrower sole proprietor or JBSP mortgage) is designed for situations where a buyer needs extra income to qualify for a large enough mortgage, but does not want (or need) a second person to become a co-owner of the property. **How it differs from a standard joint mortgage** In a standard joint mortgage, all named borrowers are usually also registered as joint legal owners on the property title, and would typically each need to be considered for their own Stamp Duty Land Tax position on additional properties. Under a JBSP arrangement, the second borrower's income and creditworthiness are used to help the lender assess affordability, and they are legally liable for the mortgage debt alongside the main buyer, but the property title is registered in the sole name of the actual buyer(s) living there -- the helper has no ownership stake at all. **Why this matters for Stamp Duty** Because the helper does not become a legal or beneficial owner of the property under a properly structured JBSP arrangement, they should not trigger the additional 5% Stamp Duty Land Tax surcharge that would normally apply if a person already owning a home became a co-owner of a second property. This is one of the main reasons parents use JBSP rather than becoming full joint owners, as adding themselves as a co-owner on a standard joint mortgage could trigger the surcharge on the whole purchase price. **Lender availability and criteria** Not all lenders offer JBSP mortgages, and those that do vary in their maximum age limits for the joint borrower (some cap the mortgage term so it ends before the older joint borrower reaches a certain age, such as 70 or 75), income multiples used, and whether the joint borrower needs to already own their own home. A mortgage broker experienced with JBSP products can help identify a suitable lender. **The joint borrower's liability** Although the joint borrower has no ownership stake, they are just as legally liable for the mortgage debt as the sole proprietor -- if payments are missed, the lender can pursue the joint borrower for the full amount owed, and missed payments will affect both parties' credit files, even though only one of them owns the property. **Worked example** A first-time buyer earning £30,000 cannot borrow enough alone to buy a £280,000 flat. Their parent, who already owns their own home outright, becomes a joint borrower under a JBSP mortgage, adding their income to the affordability assessment without becoming a co-owner of the flat. Because the parent has no ownership stake, the purchase is assessed for Stamp Duty as a normal single-property purchase in the buyer's name, avoiding the second-home surcharge that would apply if the parent had instead become a joint legal owner. **Practical tip** Because the joint borrower remains fully liable for the mortgage without gaining any ownership rights, both parties should take independent legal advice before entering a JBSP arrangement, and consider what would happen to the mortgage liability if the relationship between the parties changed or if the sole proprietor could no longer keep up repayments.

Try the calculator

More answers

• What are the rules for using a gifted deposit for a UK mortgage?