Joint mortgages

What is a joint mortgage?

A joint mortgage is when you purchase a home with someone else, and so you apply for a mortgage together.

You are jointly responsibly for the mortgage payments, however you want to split them. You'll also all have to meet the lender's eligibility criteria.

Many people take out a joint mortgage with their partner, friend or sibling to enable them to purchase a property.

How do joint mortgages work?

With a joint mortgage, you apply for a loan from a lender along with one or multiple people (up to four).

This means the lender will look at the eligibility and affordability of each applicants. They will take the following criteria into account:

• Income

• Spending habits

• Credit history

It's important to be aware of this, because if you have an excellent credit rating but your fellow applicant does not, then this could affect the chances of your application being accepted.

However, one of the main benefits of applying for a joint mortgage is it means you can combine your incomes in order to borrow more, possibly helping you get a bigger or nicer property.

For example, if someone earned £30,000 a year, they can normally borrow around four times that (£120,000). However, if their partner earns £40,000 and they combine their incomes (£70,000) to apply for a mortgage, they could borrow £280,000.

It also means you can combine your savings efforts to save up a bigger deposit, and possibly access better mortgage rates.

How to apply for a joint mortgage?

To apply for a joint mortgage, you should:

• Agree who you're taking the mortgage out with, and make sure to discuss how you'll split the deposit and monthly payments.

• Check your credit histories. All applicants should make sure to identify and resolve any issues well in advance of applying for a mortgage.

• Speak to a mortgage broker. Find a broker who can compare mortgage deals from across the market to get the best joint mortgage for you.

Who can take out a joint mortgage?

While many people take out joint mortgages with their partner, you could also take out one with a friend or family member.

“I speak to people from all over the country and buying with friends is far more common in areas like London, where people struggle to get on the property ladder as property prices are higher. I don't see this so much in areas like the North East, where property prices are much more affordable for borrowers.

Lenders often see buying with friends as riskier, so criteria doesn’t always allow for a successful outcome, but I have seen a slight increase in this type of request in recent years. It's not just friends either, probably around 5% of applicants I speak to are looking to buy with either friends or family members like siblings and cousins.”

Tanya Little, Mortgage Expert, Mojo Mortgages

There are some more details on joint mortgages for unmarried couples and ones with your parents below.

Joint mortgages for unmarried couples

Joint mortgages for unmarried couples are increasingly popular as many people choose to purchase a home before getting married.

Most couples choose to take out a standard joint mortgage where both partners will have rights to the property.

The main choice for unmarried couples, is how they choose to own the property together, whether that's joint tenancy or tenants in common.

Joint mortgages with your parents

If your parents want to support you in getting on the property ladder by applying for a mortgage with you, you could get a standard joint mortgage.

However, you could also get a joint-borrower-sole-proprietor mortgage where the parent(s) become jointly responsible for the mortgage payments but don't have joint ownership of the property.

You can also get a guarantor mortgage. This is where a parent acts as a guarantor, which is essentially means they agree to pay off the mortgage if you can't.

Joint ownership

Applying for a mortgage is one element of the process, but you also need to decide how the property ownership itself will work. You can choose between joint tenancy and tenants in common.

Joint tenants

Joint tenants – up to four people – all own the property. All of the owners in a joint tenancy therefore act as a single owner.

This means any plan to remortgage must be done to the whole value of the property and all at the same time, rather than on a share of the property.

Similarly, if one of the owners dies, then that share automatically passes to the rest of the owners. Generally a joint tenancy between up to four owners is still treated as if it were owned by one person.

This means that you can't leave part of the property in a will. All owners in a joint tenancy are liable to the full amount of the mortgage, so if one person stops paying, the others will have to cover the repayments.

Tenants in common

Tenants in common allows you to each own a different share of the property, which means you can sell your parts of the property separately.

You won't automatically inherit the other's share of the property if they die, which means you could both leave your shares to other people in your wills.

If you're interested in this option, it's worth speaking to a solicitor about setting up a deed of trust. This will outline how much of the property each person owns.

Can a joint mortgage be paid by one person?

Yes, the joint mortgage payments could be made by one person. The lender doesn't really care which of you is paying, as long as the payments are made.

However, it's important to remember that you're both liable for the mortgage payments. If one of you stops paying, and the other can't afford to pay the full amount, this will cause problems.

It's best to have an honest conversation with whoever you're taking out a joint mortgage about how you'll repay the loan, including making plans for if you were to split up or if you were ever to struggle to make your share of the payments.

Options for leaving a joint mortgage

Buying a property with someone else can be a good idea at the time, but there may come a time where you want to leave a joint mortgage. For example, if you and your partner were to separate.

If you want to leave a joint mortgage, there are some options:

• Sell your home – you can sell the home, pay off the mortgage and split any profits (or debt if you're in negative equity).

• One of you buys out the other share – however, you'll need to prove you can manage the mortgage repayments on your own.

• Retain a stake in the property – one of you could transfer most of the ownership to the other, but still retain a small stake in it. They would therefore be entitled to money if the property was sold.

• Pay off the mortgage – if you're close to paying off the mortgage, it may be worth continuing until it's paid off. You can then sell the home and split the proceeds.

• Get a guarantor – If you are struggling to evidence that you could afford the full mortgage payments on your own, you may be able to get a guarantor mortgage. This is when a family member agrees to pay if you can't.