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Joint mortgages

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Written by Marianne Curphey

Joint mortgages are very similar to regular mortgages, except there can be up to four different names on the house deeds instead of one. You can jointly buy a property with a spouse or partner, or with up to three friends, family members, or even business partners.

Just remember: taking out a joint mortgage with someone will link you to them financially, so it is not a partnership that should be entered into lightly.

What is a joint mortgage?

A joint mortgage is almost identical to a standard single-person mortgage, but instead of just one name on the title deeds (the legal documentation of ownership), there can be up to four. Joint mortgages are most commonly used by spouses or partners, but you can take one out with family members, friends, or even business partners as an investment.

For most people, the main advantage is that you can borrow more because the mortgage is based on two or more incomes. By pooling your savings, you may also be able to provide a larger deposit, which will help you get a better mortgage deal.

How does a joint mortgage work?

Generally speaking, you will be able to get a larger mortgage if you have two or more incomes to pool together. By combining your savings into a larger deposit, you should also have access to better mortgage rates. Lenders tend to reserve the cheapest mortgage deals for applicants with deposits of at least 25% (a loan-to-value ratio of 75%) or more.

But each person named on a joint mortgage is responsible for making the repayments in full. So even if one person stops paying, the mortgage payments still need to be met, in full, every month. That’s why it is vital to think very carefully about who you want to share a mortgage with – a joint mortgage paid by one person can be very expensive! Remember too that a joint mortgage links you financially to the other person or people. So if one of you has a bad credit history, it could impact both or all of you, and affect your chances of securing a mortgage together.

If you are investing different amounts of deposit, or one person is going to be paying more towards the mortgage repayments, it’s important to agree these details in writing. Discuss how you would split the proceeds if and when you eventually sell the property, and include this in the contract written up by your solicitor or conveyancer. 

Types of joint mortgage

There are two main types of joint mortgage:

  • Joint tenant

  • Tenants in common

Joint tenant

Joint tenant, or joint tenancy, mortgages are generally most popular with long-term partners because although there are two names on the deeds, you’re treated as a single owner.

You have equal rights to the property (in other words a 50/50 split) and any decision regarding the property must be made together – for instance, if you decide to sell. If one partner dies, their part of the property will also automatically go to the surviving partner, even if they’ve outlined a different recipient in their will.

Tenants in common

With a tenancy in common mortgage agreement, the shares of the property – which do not need to be evenly split – are separate, even though the mortgage itself is joint. As such, tenants in common mortgages are well suited to friends, relatives or business partners who buy together. They are also a good option for couples who are investing different amounts in a joint property. If you die, your share does not automatically go to your co-owner – if you name someone else in your will, for instance, it will go to them. If you die without a will, the normal rules of intestacy apply.

With a tenancy in common mortgage, there is generally a trust of sale arrangement, which means that if one tenant decides to sell, the whole property must be sold.

However, if you wrote a trust deed when you first got the mortgage, you may be able to sell your share to your co-owner instead.

A financial guide to sharing a home with someone else

Does a joint mortgage affect my credit score?

When you make a joint application for credit – which could be a mortgage, a credit card or a loan – the name of the person you make the application with appears on your credit report. This is known as “financial association”.

So if they have a poor credit score, this could have a detrimental impact on your credit report, as well as making it more difficult to find the best joint mortgage.

“All borrowers need to meet the lender’s criteria to be accepted for a mortgage – to qualify for the best rates you will both need to have a good credit score,” says financial broker, Holly Andrews. “Pairing up to buy a property with someone who has bad credit will make borrowing more expensive for you too.”

It’s therefore very important that all co-applicants are honest about their financial history, including County Court Judgments (CCJ), missed or late bill payments, and any other arrears. 

Everyone who is applying for the mortgage should also make sure they are on the electoral register, as this is the first criteria of credit worthiness a lender will check.

Can I get a joint mortgage with my parents?

Yes, but they will need to be homeowners themselves to qualify. Getting a joint mortgage with your parents could improve your chances of getting on the housing ladder thanks to their income, the savings they have built up, or the equity they have in their own home.

You could go down the tenants in common route outlined above, or choose one of the following options:

  • Joint borrower, sole proprietor mortgage

  • Guarantor mortgage

Not all lenders offer mortgages of this kind, and those that do may call them different names, such as family springboard, lend a hand or family deposit mortgages.

One advantage of joint borrower, sole proprietor mortgages is that you can avoid paying the 3% stamp duty surcharge on second homes, which is otherwise applicable when you take out a joint mortgage with someone who already owns a home - even if you are a first-time buyer.  

But as with all joint mortgages, your parents will be liable for the mortgage repayments if you cannot pay them. And if they cannot meet the payments, they run the risk of potentially losing their home. With this in mind, it is crucial your parents understand the implications of taking out multiple mortgages – it might even be worth drawing up a legal agreement between you all.

Can a joint mortgage be transferred to one person?

Yes, a joint mortgage can be transferred to one person if, for example, you split up with your partner or want to buy out a friend. 

If you can afford to buy their part in the property, and cover the ongoing mortgage payments by yourself, this can be quite a simple process.

However, you will have to undergo an affordability check to prove you can manage the monthly repayments on your own. And once the other person’s name has been removed from the mortgage, the majority of lenders will insist that he or she moves out of the property.

If you cannot afford to pay the mortgage on your own, you have two main options. You can sell the property and split the proceeds with the other joint mortgage holders. Or you can replace the person leaving the joint mortgage with someone else. 

In this situation, the new borrower will face affordability and other checks to ensure he or she is in a position to make the repayments. A transfer of equity will then take place between the person leaving and the one joining the mortgage. This will usually also involve the new owner buying the equity in the property via a lump sum payment.

Can I add someone’s name to my house deeds and mortgage?

Adding a name to your mortgage generally involves changing a single mortgage into a joint mortgage. 

This will not usually cause a problem as, for the lender, it means there will be two people paying the repayments rather than one. However, the usual checks will apply to ensure the new person does not have a very poor credit history and can afford to pay the mortgage.

In most cases, you will have to pay stamp duty on the transaction, as well as any legal fees involved in adding a name to the property deeds. 

If you are on a fixed rate, tracker, or discounted rate mortgage deal, you may also face early redemption charges or penalties. If this is the case, it may be sensible to wait and apply for a joint mortgage together when your deal comes to an end.