Almas Uddin
Founder and Mortgage Advisor
07 Feb 2024
Joint Mortgage Applications
Applying for a joint mortgage with a partner, friend or family member is common. That means you share the responsibility for the debt and pool your resources to keep up with the repayments.
Joint mortgages are available between two and usually up to four applicants.
Everybody named on the mortgage advisors paperwork is responsible for the monthly payments. You can share the ownership equally or divide this any way you like, which you should agree to during the acquisition process.
Who is Eligible for a Joint Mortgage?
While partners or couples are the most common people to apply for joint mortgages, this can take any structure.
Unmarried couples, civil partners and up to four friends or family members might decide to purchase a property together.
- Friends and family mortgages are most common in London and make it more affordable to purchase homes in high priced areas.
- Family members can apply as a joint applicant to support a child or close relative that needs help affording their first mortgage - usually as a guarantor mortgage.
- Business mortgages are available between partners as an investment proposition either to let out or to live in.
How Do Joint Mortgages Work?
Each person on the paperwork is responsible for the payments, and it is up to you how to share them out. If one person stops paying, all of the applicants will be responsible for the debt.
You don't need to have a joint bank account, but it can be the most streamlined option. If you want to make changes to the mortgage, every borrower needs to agree.
There are two primary structures for joint property ownership:
- Joint tenants mean that you own the property equally and are treated as one owner. All applicants have the same rights to the property, and if one owner dies, their share automatically passes to the other owner. If the property is sold, the profits are split equally.
- Tenants in common means that each party owns a separate share. They can decide to sell their stake to somebody outside of the joint mortgage. This option is most often used for business ventures or when friends buy a property together.
Couples usually use joint mortgages, but it's worth thinking through since if you want to get out of a joint mortgage, you will likely incur some costs.
A joint venture mortgage is similar but means that investors club together to buy a property to sell it for profit.
Is It Better to Get a Joint or a Single Mortgage?
The best mortgage product depends on your circumstances. Considerations include:
- Whether any of the applicants have a bad credit history.
- If the relationship is long term - such as a marriage.
- Tax considerations, particularly for buy to let investments.
- Whether you need two incomes to qualify for the mortgage value you need.
- How much you want to borrow.
- If one partner doesn't work or has a low income.
Most mortgage providers will lend a maximum of 4.5 times your income, although this can go up or down at the lender's discretion. Therefore, if you have two applicants on the mortgage, you can usually borrow significantly more than applying on your own.
It's also essential to assess your employment type. Lenders have different attitudes toward things like commission-based earnings, and each will calculate the mortgage cap differently.
For example, if you apply for a joint mortgage with a spouse, you might earn £30,000 a year, your spouse £18,000, plus £3,500 in child tax credits. The maximum mortgage will vary between lenders:
- Lender A does not include benefit income in their affordability assessment. They offer a mortgage capped at £215,520.
- Lender B includes 50% of benefit income in their calculations and lend up to 4.85 times your annual income. They offer a mortgage of £241,287.
Should any applicant have a variable income stream, it is essential to consult a broker who can advise which lenders will offer the mortgage value you require.
Do Joint Mortgages Need a Separate Credit Check for Each Applicant?
In short, yes. There are many mortgage products available to applicants with a history of credit issues, even with as little as a 10% deposit.
There are thousands of lenders and mortgages, so the key is to consult an independent broker who will assess your credit file and recommend which lender to apply to.
What Deposit Do I Need for a Joint Mortgage Application?
There isn't a fixed deposit value since this will depend on which lender you apply to and what sort of mortgage you are taking out.
Pooling deposits together on a joint mortgage will almost certainly improve your chances of approval. The larger the deposit, the lower the risk, the more you can borrow, and the better the interest rates.
Who Can I Get a Joint Mortgage With?
A joint mortgage doesn't have to be between a married couple or partners. You can apply for a joint mortgage with your parents or with another close family member.
In some cases, a guarantor mortgage is the best solution. When you reach a position to afford your mortgage alone, you can release the guarantors.
Many joint mortgage applicants may already have a property, for example, if they remain on a mortgage with an ex-partner. You can still apply for a new mortgage if you are a joint mortgage holder on another property, however will need to demonstrate that you can keep up with the financial obligations on both debts.
Where Can I Get the Best Rates on a Joint Mortgage?
Each lender offers different interest rates. What they offer you will depend on how closely you meet their eligibility requirements.
There are joint mortgages available through several of the well known high street banks. Still, in many cases, you can get a better deal from a niche provider or by using a product only available through an experienced broker.
Do I Need Insurance for a Joint Mortgage?
Joint mortgage protection is a type of insurance that will cover your mortgage costs if you become unwell or cannot work. There are insurances specifically for the mortgage repayments and policies for general income cover.
You can also consider mutual life insurance, whereby if one mortgage holder passes away, the insurance will pay out the full cost of the remaining mortgage debt.
FAQs
What Happens if I Get Divorced but Have a Joint Mortgage with my Ex?
Even if you separate from a partner who lives in the property without you, you remain liable for the mortgage repayments. It is essential to communicate with the lender and seek advice from an independent broker in this situation. You might be able to organise for the partner living in the home to buy you out, for example.
Can I Apply for a Joint Mortgage With a Sibling?
Yes! Joint mortgages are available for partners, parents, friends and other close relatives. If you apply for a joint mortgage with a parent, you may have fewer lender options since age cap policies differ between providers. Some lenders, for example, won't accept an applicant aged over 75, others over 85, and some have no age limits whatsoever.
Can I Get a Joint Mortgage with a Partner Who Has Bad Credit?
Potentially yes - depending on what sort of credit issues they have had, how long ago, and whether they have since repaid their debts. In severe cases, a specialist bad credit lender might be the best solution.
Expert Advice with Joint Mortgage Applications
If you're considering a joint mortgage, it's always advisable to seek independent support from an experienced broker. Give Revolution Brokers a call on 0330 304 3040, or via email at [email protected].
Our team will run through the mortgage options with you and recommend the products and lenders we believe offer you the best possible deal on your property purchase.
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