Wed 14 Feb 2018
A joint mortgage is a common method for groups of buyers who are looking to share the costs of buying a home. Whether you are a couple looking to buy a home, family members, friends or business partners, a joint mortgage can assist you with dividing up the share of the property and spreading out the monthly mortgage repayment.
You don’t even need to be living with the other party. For example, children and parents will often take out a joint mortgage so that the parents can assist with the cost of buying a first home.
How do I go about getting a joint mortgage?
The process is the same as applying for a regular mortgage. Both parties will be required to attend the mortgage interview and you will both need to provide all the same relevant documents should a lender request them.
The only limitation you may face is if you are applying for a mortgage with more than three people.
How much can you borrow with a joint mortgage?
One benefit of taking out a joint mortgage is because it increases the amount that a lender will be prepared to advance.
Lenders will take both parties income and outgoings into account in an affordability assessment, with most lenders offer a calculator on their website for figuring out the cost.
So how is the mortgage split between the parties?
There are two ways that a joint mortgage can be split.
Tenants in common
Tenants in common allows each party to own a different share of the property. Each party is also allowed to decide who they leave their share to when they die. All parties are required to consent to a sale. This type of policy usually suits friends or family buying property.
Joint tenants is better suited to couples looking to purchase a property. Each person has a 100% stake in the value of the property. Again, both parties must consent before the property can be sold. If one of the parties dies, the share of the property passes to the other owner.
What happens if one of us stops paying?
Whilst both parties are jointly liable for a joint ownership, the lender won’t care whether the repayment is split evenly down the middle. The other party not paying their share won’t be accepted as an excuse for failure to repay.
Mortgage lenders aren’t interested in which of you has contributed more, they will just expect the payment.
A joint mortgage is a perfect solution for those looking to buy with a second party. Your rights as a co-owner are enshrined within the terms of the mortgage, meaning you won’t need to worry about the security of your share, you can get a bigger advance due to your combined income, and you have assistance with the costs of your mortgage.