How does credit scoring work in JBSP mortgages?

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How does credit scoring work in JBSP mortgages?

Mother and daughter applying for a joint borrower sole proprietor mortgage
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    Joint Borrower Sole Proprietor (JBSP) mortgages are products where more than one borrower is named on the mortgage, but only one person is on the title deeds of the property. As a result, there can be confusion over how to meet the lending criteria. Let’s look at how these products work.

    With a joint borrower sole proprietor JBSP mortgage, the credit score for both borrowers will be considered on the mortgage application.

    What is a joint borrower sole proprietor mortgage?

    A joint borrower sole proprietor mortgage is one where up to four applicants, usually family members, can take a mortgage together.

    This is especially useful for people who want to get on the property ladder but:

    • are on a low income which means they can’t borrow enough on their own
    • are a first-time buyer without a history of managing credit
    • have a bad credit rating
    • are not in a financial position to afford the mortgage payments on their own

    Whose credit score is used on a joint borrower sole proprietor mortgage?

    As both applicants are jointly responsible for making monthly repayments, mortgage lenders will usually look into both credit scores when making a lending decision on a joint borrower sole proprietor mortgage.

    What happens if one person has a bad credit score?

    If one of the borrowers for a joint borrower sole proprietor mortgage has a bad credit score, the other borrower’s good credit score can enable them to get a mortgage, which otherwise might have been impossible.

    How to improve your credit score for a JBSP mortgage

    A JBSP mortgage can help you improve your credit score. This could be a good product for those with little credit history, such as young people who have always lived in the family home, have not been the billpayers and haven’t taken out many other forms of credit, such as loans or credit cards.

    You can improve your credit score by:

    Managing your credit utilisation

    Lenders want to see that you can make regular repayments and take your obligations seriously. That’s why it helps your credit score if you have made on-time payments on a credit card or personal loan without becoming overly reliant on your credit card limit.

    Aim to use a maximum of 25-30% of your limit at any one time and work at paying the balance down over time.

    Checking your credit report

    Sometimes credit reports are wrong or incomplete. Check your credit status regularly to spot errors and have them corrected. Errors on your credit report could be the difference between being accepted for a JBSP mortgage and being turned down by mortgage providers.

    Registering on the electoral roll

    Lenders of all types of mortgages, including joint borrower sole proprietor mortgages, will check to ensure you are on the electoral register. This is a quick check to establish that you are a UK citizen, so you won’t have to provide additional information on your identity or residency status.

    If you’re not on the electoral register could be a red flag for a mortgage lender.

    Get to know your mortgage options today with Simmonds Mortgage Services

    Simmonds Mortgage Services are experienced mortgage brokers with access to specialist lenders that offer JBSP mortgages to help people get on the property ladder. With increased property prices, first-time buyers are finding it increasingly difficult to afford a property on their own without a significant annual income.

    Joint borrower sole proprietor mortgages enable you to get a joint mortgage with a family member to share the mortgage repayments or to overcome the barriers from a bad credit score. Call us at 01184 639037 to talk about how a JBSP mortgage can work for you and to find the best mortgage deals.

    Frequently asked questions about JBSP mortgages

    What happens if the legal owner on a joint borrower sole proprietor mortgage dies?

    The other borrower, who is not the legal owner on a jbsp mortgage is still responsible for making monthly repayments if the legal owner of the property dies. The property will be passed on according to the terms of the will, or intestacy law if there is no will. If the will leaves the property to the joint borrower, they can take sole ownership and may be able to transfer to a mortgage solely in their name.

    What happens to a joint borrower sole proprietor mortgage if the legal owner gets a bad credit score during the mortgage term?

    As long as the mortgage is being paid, there will be no impact on either the legal owner or the family member who is the joint borrower.

    What are the advantages of a JBSP mortgage?

    This specialist mortgage means you can use the combined income of up to four people to secure a larger property than you could afford on a standard residential mortgage. It’s even possible to borrow with adverse credit because most mortgage lenders who offer JBSP mortgages will balance your poor credit with the other borrowers’ good credit when assessing overall risk.

    What are the cons of a JBSP mortgage agreement?

    Missed payments, a higher interest rate, and not having a beneficial interest in the property are some of the downsides of how JBSP mortgages work. Talk to a mortgage advisor like Simonds Mortgage Services to ensure it is the best option.

    Do lenders offer JBSP mortgages on buy-to-let property?

    Yes, it is possible, but not many lenders offer this type of JBSP loan. You will need a higher deposit of at least 25%, and interest rates are likely to be higher than for a residential mortgage.

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    Andrew Simmonds

    Andrew Simmonds is the managing director at Simmonds Mortgage Services. He's been providing mortgage advice to home owners for many years.

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