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Joint Income Mortgage Affordability Calculations

Everything you need to know about applying for a joint mortgage and how a lender will calculate your affordability based on two combined incomes.

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Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
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Joint Income Mortgage Affordability Calculations

Joint mortgages are very common - but whether you're buying a first home or purchasing a new property to live in together, understanding how lenders will assess your income is vital.

Many couples opt for a joint mortgage, but these are also relevant to many different people, including buying a rental investment with a partner.

Here we'll explain how joint mortgage applications work - if you'd like independent advice about the best lender for your borrowing needs, give the Revolution Brokers a call on 0330 304 3040!

How Does a Joint Income Mortgage Work?

Joint mortgages mean buying a home with another person on the deeds, who is also responsible for the repayments. Couples usually choose a joint mortgage as they can borrow more when combining both salaries.

There are many ways to split out that ownership - while typically the property is owned 50/50, you can structure the equity ownership differently if you choose.

Most joint mortgages are for two people, but you can apply with as many as three others, with the typical maximum being four applicants.

If you apply for a joint mortgage between four people, most lenders will only use the income from the highest-earning two applicants in their affordability calculations.

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Am I Eligible to Apply for a Joint Mortgage?

Lots of different people apply for a mortgage together - applicants might be:

  • A couple, married, or in a civil partnership.
  • Friends or family members.
  • Business partners.
  • Buying a home as a parent and child.

How is Property Ownership Shared on a Joint Mortgage?

There are two main options - joint tenancy, and tenancy in common.

  • Joint tenancy means you own the property equally and, if you sell it, the profit is shared in the same way. If one partner passes away, the surviving owner takes over ownership of the whole property.
  • Tenancy in common is more typical for friends, business partners or family members buying a home together. The applicants separate their share of the house and usually need a trust deed to be written by a solicitor.

What is the Maximum I Can Borrow on a Joint Mortgage Application?

The affordability calculation for a joint mortgage is usually the same as for a single applicant - the lender will combine your annual income, and multiply it by their stipulated maximum multiplier to decide the maximum they can lend.

Illustration:

  • A married couple earns £60,000 per year by combining their salaries.
  • Their lender offers a mortgage up to four times annual salary.
  • The maximum they can borrow is £240,000.

However, while this calculation is very straightforward, lenders need to consider other factors, such as:

  • Other debts that might mean the couple cannot keep up with the repayments.
  • The possibility of interest rates increasing, making the monthly cost higher.

Therefore, lenders need to comply with responsible lending, which means considering other debts, existing outgoings and dependents, rather than solely the income of the applicant.

Most lenders will base the cap on four or five times income - although some can offer up to six times your earnings, in specific circumstances.

What Other Eligibility Criteria Apply to Joint Mortgage Affordability?

Specific criteria depend very much on the lender - most will have internal policies relating to the below factors:

  • Income structure. Most lenders use 100% of a PAYE salary in the calculation, including overtime or bonuses. Not all lenders will allow commissions or any payments outside of the regular wage, and some will only include 50% of this variable income.
  • Self-employment. Self-employed applicants will usually need to provide accounts for at least three years - although some lenders can accept a shorter trading history.
  • Living expenses. To ensure you can make the repayments, a lender will usually ask you to draw up a schedule of your regular outgoings, including existing debts, and compare this to bank statements.
  • Changes to future circumstances. Lenders need to stress test the affordability of an application, to demonstrate that if interest rates rise, or your circumstances change, you will still be able to afford the loan.

Can I Apply for a Joint Mortgage on a Single Income?

Yes, many couples have one income earner and one person who does not work or is temporarily out of work.

Credit checks still apply to both applicants, and if the non-working partner plans to return to work in the future, it can support the application.

Can I Get a Joint Mortgage Past Retirement?

Yes, there are mortgages available based on pension income - although it is essential to consult an independent broker who can advise which lenders accept retired applicants.

Some lenders have an age cap of 75 or 85, and others have no limit at all.

The critical criteria will be around what sort of income you receive, and how long the mortgage term is.

What Deposit Do I Need to Get a Joint Mortgage?

Minimum deposits can range from as low as 5% up to 20%, depending on how much the property costs and your circumstances.

There is no universal benchmark, but the higher the deposit, the less risky the loan and the better the terms you will offer.

Can I Get a Joint Mortgage with Bad Credit?

If one, or both people, on a joint mortgage application has an adverse credit history it can limit the number of lenders you can apply to.

There are niche lenders who can offer a joint mortgage, whether you have any of the below credit issues on your file:

  • Late payments or defaults
  • CCJs or mortgage arrears
  • DMPs or IVAs
  • Bankruptcy
  • Repossession

A specialist bad credit lender may be the best option - give us a call, and we'll recommend the best course of action!

UK Specialist Mortgage Advice for Joint Mortgages

If you're looking for the best joint mortgage deals or would like help finding the most competitive lending products on the market, get in touch.

The business loan broker team is available on 0330 304 3040, or via email at [email protected].

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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