Mortgage With Family And Friends

Explore the possibilities of getting a mortgage with family or friends and how a mortgage broker can help you

Firstly, who are you looking to apply for a mortgage with?

Home Mortgage Application Mortgage With Family And Friends

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 13, 2024

In this article, we’ll explain if it’s possible to get a joint mortgage with family and friends, how this works, which lenders offer this type of mortgage and how a broker can help you get one.

Can you get a joint mortgage with family and friends?

Yes. It’s perfectly possible to get a mortgage with a friend or family member.

From a lender’s perspective, the process is very similar to a joint mortgage for a couple. The only real difference for them is the way in which they calculate borrowing power.

While you can include up to four borrowers on a mortgage with some lenders, typically the maximum you can borrow would be an income multiple of the two top earners. Some providers will go to three – or even four – applicants at their discretion.

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How would this work?

There are two ownership options when taking out a joint mortgage:

  • Joint tenancy – This is the most popular choice for couples. Each borrower owns the whole property together
  • Tenants in common – Ownership is not shared out equally and you can split the portions any way you like. This is most popular with groups of friends or family members who are each contributing different amounts towards the deposit, mortgage repayments and maintenance costs.

See our dedicated article on joint tenants vs. tenants in common for more information.

It’s important to have an open and honest discussion about which is best for you, and how you will make things work on a practical level as soon as possible. The solicitor can advise you further on this.

All lenders will require that at least one of the applicants is named on the bank account from where the direct debit will be paid. This will be used to make mortgage repayments and you will all need to transfer your share of the funds into that account in good time.

But you may want to use that account to pay household bills and/or to store savings for any emergency repairs or DIY jobs. These issues should be discussed early on in the process to ensure all parties are clear from the outset on how responsibility is shared.

Signing a deed of trust

If you choose to buy as tenants in common, you should speak to a solicitor who may recommend a deed of trust. This will clearly define each owner’s duties and responsibilities and help to avoid disagreements or confusion further down the line.

This could include things like:

  • What share of the property each person owns
  • Financial responsibilities of each party
  • An inventory of personal possessions (furniture, white goods etc)
  • How disputes will be resolved

What happens if one person can’t afford to pay their share?

With joint mortgages, all parties are equally responsible for keeping up with full repayments. That means that if one person can’t afford their share, the mortgage provider will still expect the full payment to be made.

What about if somebody wants to move out?

There are several options if one (or all) parties want to move out.

An individual’s share could be bought out or you could agree to rent out the vacant room(s). (The lender may require consent for this).

Your best bet in these circumstances is to speak to a broker to find out your options and agree on a way forward.

Would everyone named on the mortgage have to live in the property?

Not necessarily, but the expectation would be that this type of mortgage arrangement would be based on the assumption that all applicants were also going to live there.

If an arrangement is required where a family member is assisting another to get on the property ladder, with no intention of living there themselves, there may be better alternatives available such as a guarantor mortgage or a joint borrower sole proprietor mortgage.

Can you get a mortgage with a retired parent?

Yes, it’s possible. There are no real barriers to buying with any member of your family, but age and affordability can be an issue when buying with retired parents or grandparents.

This is simply because some lenders have an age cap. If the oldest borrower is 55 and a lender’s maximum age for mortgage applicants is 75, you will be limited to a 20-year mortgage which would result in higher payments than 25 years.

The good news is that there are lenders who have a maximum age of 95, and some who place no upper age limit on lending.

How to get a mortgage with a friend or family member

Follow these steps to get a mortgage with family or friends:

  1. Speak to a broker – In other circumstances, this step might come later, but here this should be your first port of call. This is because the best way to proceed and the right deal for you will be determined by your short, medium and long-term plans for the arrangement. A mortgage broker with experience securing this type of loan will also be able to advise you all on any steps you need to take to maximise your chances of approval before going ahead with an application. This might include considering a range of insurance products to protect all borrowers in the event of an unexpected change in circumstances or just tidying up your application.
  2. Act on the advice – Your advisor may suggest you clear up any discrepancies on your credit files, get yourselves on the voters register, be more specific with your budgeting, or it might be something else. Whatever it is, get it done as soon as practicable so you can move on.
  3. Make the formal arrangements – Once everything is in place and you have an agreement in principle, it’s time to find a property, complete your full mortgage application and decide on whether you will be tenants in common or joint tenants.

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Eligibility criteria

Eligibility is not stricter for joint mortgages with friends or family, but it is slightly different.

All borrowers must individually meet lenders’ criteria. So, it’s worth having a chat about credit files when you first start to plan your home-buying venture. One applicant with a poor credit history could mean veering away from high street lenders and looking for specialist bad credit mortgage providers.

Some providers will have a maximum borrowing amount of, say £250,000.

Other mortgage products such as offset mortgages and open plan flexible mortgages (OPFMs) will be limited to two borrowers with some lenders.

In most cases, all borrowers will be expected to use the property as their main residence. There are often exceptions for borrowers who are getting assistance from parents or grandparents.

Which lenders offer this type of mortgage?

Joint mortgages are pretty common, and most lenders offer them. If you and one friend or sibling are looking to buy a house together, almost all UK lenders will be able to help you provided you pass standard eligibility checks.

The good news for larger groups is that there are more than fifty providers willing to accept applications, including major high-street banks such as Halifax and Barclays.

Often, though, the best deals according to a group’s specific circumstances are found via specialist lenders.

Maximise your chance of approval with a specialist in joint mortgages

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Can you take over a mortgage from a family member?

This is possible but not always straightforward.

The person taking over the mortgage would need to meet the existing lender’s eligibility and affordability criteria. And if the provider no longer offers that deal, they may not be willing to transfer it.

Rather than going straight to your lender, you’re advised to speak to a broker in this instance. They may be able to arrange a better deal elsewhere that saves you money and avoids the hassle of transferring a mortgage.

Can you add a family member to your mortgage?

Technically, yes. If you’re not looking to change the amount you’ve originally borrowed you can add someone by completing a Transfer of Equity procedure with your existing lender, although the incoming borrower will still need to meet the lending criteria. If you want to make changes to an existing mortgage then you would need to refinance the current terms, which can include adding someone to the new agreement.

Can you get a mortgage for someone else?

It’s common for parents to want to help their children get on the property ladder and there are many ways of doing so:

Get matched with a broker who specialises in mortgages with friends or family

There is a lot to consider when taking out a joint mortgage with friends or family, but don’t let that put you off taking an important step in your life and getting on the housing ladder.

By partnering with a mortgage broker who deals with these types of loans on a daily basis, you can rest assured you’ll receive expert advice and the best deal for your circumstances.

To find the right advisor for you, use our unique broker matching service. We’ll ask for a few details and then search our database of UK brokers to find the one best suited to your requirements.

Call today on 0808 189 2301 or enquire online to arrange a free no-obligation chat with an expert.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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