Joint Borrower Sole Proprietor Mortgage. JBSP Mortgage & ILA through SAM Conveyancing
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Joint Borrower Sole Proprietor Mortgage

05/05/2023
(Last Updated: 13/06/2023)
2,264
11 min read
Key Takeaways
  • A joint borrower sole proprietor mortgage allows applicants to get help from a relative or friend. The second borrower will share the responsibility for the mortgage, but they will not be registered on the legal title of the property.
  • In this context, if parents are helping their children get a mortgage, they can avoid stamp duty.
  • The application process is similar to a regular one, but the additional borrowers must get Independent Legal Advice, as they will share the liability, but will have no benefits. Lenders make it a requirement for the potential risks to be understood.

Mortgages are offered to borrowers based on their income. The smaller your income, the less you will be able to borrow.

The joint mortgage sole proprietor mortgage product is aimed at mortgage applicants who cannot afford the full mortgage on their own, but can do so with the help of a joint applicant.

This means an applicant with a lower salary can get support from a family member, partner or friend to jointly apply for a mortgage. The second borrower takes on liability for the mortgage, but won't be a registered legal owner of the property.

A Joint Borrower Sole Proprietor Mortgage differs to a normal mortgage because:

  • Some of the borrowers aren't registered on the legal title
  • All parties, whether legal owners or not, are equally liable to repay the full mortgage debt;
  • All parties, whether legal owners or not, are bound by the terms of the mortgage;
  • You can avoid second home stamp duty if you draft a deed. Read more - Joint Mortgage Sole Proprietor Stamp Duty; and
  • The non-legal owners don't have rights to sell, use or transfer their names from the legal title.

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The main reason the JBSP mortgage is used so often is for two reasons:

    1
    Avoid Second Home Stamp Duty - the most common reason for using this product. 
    Parents who own a house can help their children buy a home without incurring the additional rate of SDLT. Similar for unmarried couples buying together. Married couples rarely use a JMSP mortgage because it doesn't matter if on or off the legal title, if either husband or wife owns an interest in another property then they have to pay second home stamp duty. Read more - Buying a house jointly with parents.
    2
    Allowing the buyer to be the legal owner - similar to the reason for guaranteeing the property, the objective of a parent is to help their son or daughter buy a home. With this mortgage they can do that without needing to have their name on the legal title which gives a feeling of ownership for their children.

Joint Mortgage Sole Proprietor Process


  • 1Get a mortgage offer
There are a number of mortgage lenders offering a joint mortgage sole proprietor product. Each of the mortgage lenders has a different approach to the application and what information they provide for the independent legal advice. We work regularly with all of the above mortgage lenders and can guide you through what you need to do.

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  • 2Draft a declaration of no beneficial interest
A declaration of no beneficial interest, such as a deed of trust, is needed for the protection of the parties on the mortgage but not on the legal title and to demonstrate the non-legal owner has zero beneficial interest in the property.
  • Protects the legal and non-legal owner - Within the deed of trust the legal owner and non-legal owner can set out their intentions for the arrangement such as what to do when either party wants to leave, what happens if you are unable to make mortgage repayments or who is liable should there be a breach to the terms of the deed of trust.
  • Evidence of zero beneficial interest - A deed of trust can be drafted to evidence a joint borrower has no future entitlement to capital proceeds from the sale of the property, to income or to occupy the property. Without written evidence, and if in the future any of these benefits are evidenced by HMRC, the transaction could have the higher rate of stamp duty applied to it if the non-legal owner has an interest in another property.

  • 3Get Independent legal advice
As part of the conditions of the mortgage offer the non-legal owner needs to speak to a legal adviser so that they can be made fully aware of their obligations under the mortgage.

The legal advisers acts on behalf of the mortgage lender and is instructed to ensure they have provided independent advice to the non-legal owners in relation to the JBSP mortgage product.

Your solicitor will:
  • review all of the mortgage documentation and financial statements;
  • discuss the following with you in a face-to-face meeting:
  1. the nature of the documents and the risk that you may lose your home if you both cannot meet the mortgage payments, and even the possibility that you could be made bankrupt;
  2. the seriousness of the risks involved by reference to the purpose, amount and terms of the mortgage and whether you understand the value of the property being charged and if there are any other assets out of which repayment could be made if a problem occurs in relation to meeting the mortgage payments;
  3. the fact that the lender may alter the terms of the loan including increasing the amount borrowed without reference to you;
  4. whether you are content for the legal advisor to write to the bank confirming that they have explained the nature of the documents to you and the practical implications they may have;
  5. whether you wish the legal advisor to negotiate with the bank on the terms of the transaction (e.g. limitation on the amount borrowed);
  6. that you do have a choice on whether to sign and consent to mortgage with the decision being up to you alone; and
  7. the legal advisor must make sure that you have not been pressured into this transaction in any way.
  • Draft and send an Etridge Letter to you summarising the discussion and asking you to sign and send back an acknowledgement. Once the legal advisor has this back from you.
  • Complete the mortgage certificate and supply it to the bank.

  • 4Conveyancing Process
The conveyancing process is the same as a normal purchase. Here are a few scenarios where this type of mortgage product is used:
  • A parent can be jointly on the mortgage but their child is the sole legal owner;
  • A friend can be jointly on the mortgage but their friend is the sole legal owner; or
  • A partner can be jointly on the mortgage but their partner is the sole legal owner.
Each circumstance is different and mortgage lenders will review each individual case separately. In every case, separate legal advice is required.

Which banks offer joint borrower sole proprietor mortgage?

Here is the list of mortgage lenders offering a JBSP mortgage product:

Do you need Independent Legal Advice?

Please keep in mind that you must be on your own, with no one else in the room, for the full duration of time that the independent legal advice is being given via Skype.

Please fill in the form below if you are the only party needing Independent Legal Advice.

Fixed fee of £234 INC VAT | Availability starting 22/07/2024*
Please fill in the form below if you are an additional party needing Independent Legal Advice.

Fixed fee of £180 INC VAT | Availability starting 22/07/2024*
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Andrew Boast of Sam Conveyancing
Written by:
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Caragh Bailey, Digital Marketing Manager
Reviewed by:

Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.


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