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A Complete Guide to Joint Mortgages

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 27, 2021

A mortgage is the most significant debt most people take on, and that’s just one of the reasons why so many share the responsibility with their partner, parents or even friends. In other words, they take out a joint mortgage.

If you’re thinking of doing the same, the good news is that the expert brokers we work with have in-depth knowledge of these products and can help fulfil that home ownership dream.

In this article, we will talk about how a joint mortgage can easily be agreed (assuming you’re eligible) and also discuss some of the other factors that will need to be considered.

What is a joint mortgage?

A joint mortgage is a type of mortgage that enables two or more people to buy a property together, sharing the equity in it as well as the responsibility for the mortgage payments.

All the individuals named on the mortgage are responsible for making repayments in full, every month. During the house buying process you can also decide between you how to share the equity in the property, an area we will cover in more detail later in this article.

The process of taking out a joint mortgage is the same as if you were buying a property on your own, i.e. sole mortgage. However, the other people named on the joint mortgage must sign all of the documents, meet with the solicitors and be involved with every other step of the process.

Who can apply for one?

Most joint mortgages are taken out by two people who are usually a couple, but they can also be taken out by unmarried couples and civil partners. In some cases, mortgage lenders will allow up to four people to buy together – including friends, siblings and other blood relatives – and you can have more than one joint mortgage, if you want.

A joint mortgage be taken out in the following scenarios:

  • With friends and familyIt‘s quite common in London for groups of friends to get together to buy a property instead of renting due to the escalating property prices.
  • Guarantor mortgages: A family member can help you afford a mortgage by supporting you financially – more on these products later.
  • Joint investment mortgages: A business partner who wants to invest in property with you, with the view to letting out the property or residing in it.

Eligibility criteria

When considering a joint mortgage, there are a number of factors that will impact your eligibility and therefore your choice of product, whether you’re married or looking for a joint mortgage unmarried, and we will provide you with information about each of these.

They include:

  • Deposit: How much you have between you. Most lenders ask for at least 10% of the property’s value for a residential mortgage, but putting down more can help you secure a superior interest rate
  • Affordability: Are your combined incomes high enough to cover the mortgage payments plus the monthly interest?
  • Credit history: Having clean credit is always a bonus, but there are specialist lenders for people with various types of bad credit.
  • Property typeAnything that isn’t made from bricks and mortar might call for a specialist lender, as might a unique or unusual type of building.
  • Employment: Some lenders prefer customers in secure, full-time employment, but there are a range of mortgage providers who specialise in self-employed applicants
  • Personal circumstancesOther factors such as your outgoings may be taken into account. Significant financial commitments besides your mortgage could impact the amount you’re able to borrow.

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How does it work?

As mentioned earlier, everyone named on a joint mortgage is equally responsible for making sure the full repayment due is made to the lender each month. You may, however, decide to split the payments 50/50, but if the other borrower stopped paying their half, the lender could pursue you and hold you liable to the unpaid debt.

Whilst it’s not compulsory to have a joint bank account for the application, it may help with your own budget planning to set up a joint bank account to fund the monthly commitment.

If you want to make any changes to your mortgage, such as borrowing more or switching it to a new fixed rate deal, this will have to be authorised by all of the borrowers.

Joint tenants vs. tenants in common

There are two ways you can own property with a joint mortgage, joint tenants and tenants in common. Here we discuss these in more detail to help you understand which would better suit your individual situation.  If you require any further clarification or assistance the mortgage experts we work with will be able to guide you through this.

Joint tenants

This means owning the property equally and it’s usually used by long-term couples and ensures all the borrowers are legally seen as one owner. Therefore, all parties involved have the same rights to the property i.e. a joint equity mortgage.

This ensures that if one borrower died, the other named borrowers would inherit their share of the property. Moreover, all profits are split equally in the event of one borrower dying.

Finally, if the property is re-mortgaged, a new joint name mortgage will need to be obtained.

Tenants in common

Tenants in common is an alternative to joint tenants as it means that all parties legally own separate shares in the property. This is the reason it is usually used when friends, family members or business partners buy a property together. For instance when you are looking for a joint mortgage with a boyfriend or girlfriend, or perhaps where there is an unequal deposit being used to purchase the property.

The benefits of tenants in common are that the percentage share is chosen by each borrower and it does not have to be split evenly, very useful when unequal deposits are being used, which would make it a joint mortgage with unequal shares.  Should the situation arise, this method means each borrower can sell their share separately, also this share can be left to someone else in a will.

A solicitor can draw up a deed of trust, which is a legal document that specifies the percentage of the property you each own and our experts can help with guidance on which scenario would fit your joint applicant the best.

Deposit requirements

In today’s market, lenders require some form of deposit when buying a house and larger deposits can open the door to more options in terms of the maximum loan available to you and your partner.

The whole-of-market brokers we work with will ensure all options are explored and we obtain the right mortgage based upon your circumstances.

The source of the deposit can also be important to some lenders as some will allow the deposit to come from a family member whilst others will ask to see evidence of the deposit in a bank account in the applicant’s names.

Another important factor for you as joint applicants to consider is whether the deposit is equal between all parties.  If one applicant is contributing a larger part of the deposit, so you have a joint mortgage with unequal deposit you may wish to consider taking out a mortgage on tenants in common basis (discussed above).

The experts we work with will be able to guide you through all the considerations the mortgage lender may have with regards to your deposit.

How to get out of a joint mortgage

There are many reasons that you may want to get out of a joint mortgage ownership. You’ll need to discuss your leaving with your fellow joint mortgage holders and once you have agreed the terms, contact your mortgage provider and let them know that you want to be taken off the mortgage. There may be some costs involved, so you’ll need to discuss this with your mortgage provider and ex-partner/s.

If you’re having difficulty getting out of a joint mortgage, see our guide to removing a name from a mortgage for further information.

Should I take out a single or a joint mortgage?

Whether the best option is a joint mortgage or not, depends entirely on your circumstances and what you’re trying to achieve.

Here are some things to consider…

  • Whether you’re married or not
  • Whether one of you has a bad credit history
  • If you want to purchase a ‘buy to let’ in one name for tax purposes (a sole mortgage application when married is quite possible)
  • If you feel that two incomes will let you buy a better home
  • If you want the maximum joint mortgage loan possible
  • If you need a joint ownership mortgage i.e. with friends
  • If you want to get a joint mortgage if one person is not working

There are many more variables when it comes to joint mortgage vs individual mortgages, so your best option is to talk to a broker who specialises in joint mortgages. One of the advisors we work with will be able to point you in the right direction.

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How much can we borrow?

When applying for a joint mortgage, lenders have different ways of working this out, and many will have affordability calculators that are based on both your combined income and your shared outgoings.

Generally speaking, there’s a standard approach to how many times salary for a joint mortgage you’ll be allowed. If you’re taking out a mortgage for two people, it would be up to 4-4.5x your joint income. However, there are some lenders that can advance up to a maximum mortgage of 5 times joint salary or 20 percent, but a few will go to 6x.

This could, however, be significantly reduced if you’re such looking for a joint mortgage, but only have one income.

In addition, different lenders will consider additional sources of income for joint mortgages, such as bonus, overtime or investments, in very different ways. Some lenders will use 100% of additional income sources in their calculations, but others may only take 50% or might not include them at all.

This also applies to any government benefits you may receive, such as child tax credit, which is demonstrated in the example below.

Example of a joint mortgage calculation…

Your basic salary is £30,000, but you are entitled to £3,500 in Child Tax credits and your wife earns £18,000.  Here’s what different lenders might be able to lend to you:

  • Lender 1 will not consider your child tax credit and will work out your maximum loan using an affordability calculator, so the maximum they will lend is £215,520
  • Lender 2 will use 50% of the child tax credit and will also, subject to loan to value limits, multiply your joint income by 4.85.  Therefore, the maximum this lender will offer is £241,287.

As you can see there is a significant difference in the calculated amount these 2 lenders will offer a joint application and this is one of the strengths we have because the experts we work with can search the market to get you the best mortgage available based upon your circumstances, saving you time and money.

It should be noted that when two or more people sign a mortgage with joint liability, the situation of joint and several liability mortgage arises. This means both parties are responsible for the full debt; so if one partner is unable to make their share of the mortgage payments, then the other must make up the shortfall. This would also apply if you had a second mortgage with a partner.

Can you get a joint mortgage if one applicant is unemployed?

Yes, this is possible and it won’t necessarily harm your chances of approval. As long as the applicant who is working is earning enough to pass the affordability checks, most lenders will be happy to put you both on the mortgage, assuming there are no other issues.

If the unemployed applicant is claiming any benefits, some lenders will even allow them to declare those benefits (or at least a percentage of them) and add count this is combined income. With benefit income factored in, you might even be able to borrow more or qualify for a wider range of mortgage products, including ones with superior rates.

How your credit score might impact your application

There are lots of joint mortgage options for people who have experienced credit problems and it is now possible to borrow up to 90% of the value of the house (known as Loan To Value), or even more with some lenders.

Your choice of mortgage will depend on the type of issues on your record, how long ago they happened and the reason for them.

The important thing to keep in mind is that specialist advice is recommended, even if only one of the people named on the joint mortgage has bad credit. The best rates and deals are harder to find with bad credit, but the whole-of-market brokers we work with know exactly which bad credit mortgage lenders to approach.

How to compare joint mortgage rates and deals

The best way to get a true comparison of the entire market is to use a mortgage broker who specialises in joint mortgages and knows the market inside out.

The rates and deals on offer from each lender is different, which is why we work with ‘whole of market’ mortgage advisors who have deep working relationships with lenders who offer joint mortgages. This means that they can negotiate the best rates on your behalf, and may even have access to exclusive deals you won’t find on the high street.

Some of the main high street names such as HSBC, Barclays, Natwest and Nationwide accept joint mortgage applications. But as everyone has individual circumstances, they may not have the best rate or deal for you, which is where the advisors we work with come in. They will look at every lender on your behalf to get the best possible deal.

Applying through a broker is an approach that could save you time, money and potential marks on our credit report.

Joint mortgage protection insurance

This is an insurance policy that many joint mortgage holders use to cover the cost of their mortgage payments, should they become sick, incapacitated or even unemployed.

You have two options for joint mortgage payment protection insurance. One specifically covers your mortgage repayments, while the other one is general income protection insurance, where you can use the payments as you see fit.

Another option is joint mortgage life insurance. This is a policy that, should the policy holder die, would pay out a lump sum that would be used to repay the mortgage in full. This would be especially useful if you have a joint mortgage with only one person working and the breadwinner is the one that passes away.

Most experts will tell you that that joint mortgage payment protection is essential for peace of mind and to ensure that you don’t lose everything you’ve worked so hard for.

Speak to an expert about joint mortgages

The best way to kick off a joint mortgage application is by speaking to a broker who specialises in joint mortgage applications. They can offer you bespoke advice about the best mortgage option for your needs and circumstances and can pair you up with the right lender first time, potentially saving you time, money and unwanted marks on your credit file.

Call 0808 189 2301 or make an enquiry and we’ll introduce you to the best broker for your needs and circumstances. We won’t charge a fee, there’s no obligation and your credit report won’t be impacted.

FAQs

Can I get a joint mortgage with my parents?

The answer to this increasing common question is, yes! The changes that the mortgage industry has seen over recent years and the impact on the housing market has meant it is much harder for first-time buyers to get onto the housing ladder, and therefore lenders are increasingly offering guarantor mortgages so parents can help their children fulfil the dream of owning their own home.

With the help of your parents you may be able to afford a larger mortgage and have access to a wider range of mortgage deals.

You will still have full ownership of the property but both you and your parents will be responsible for maintaining the monthly mortgage commitment. Therefore, all parties must demonstrate affordability.  In the future, should your circumstances change and you feel you can afford the payments yourself, it may be possible to remortgage and release your parents from their role as guarantors. This is an area the brokers we work with can help you with.

It is important that any guarantor seeks independent tax and legal advice to ensure all parties understand your joint mortgage rights and any risks involved.

Can I get a joint mortgage with a retired parent?

Yes, but your choice of lenders will be fewer as not all mortgage providers offer finance to people in retirement age, and some offer less favourable rates to senior customers.

The issue here largely comes down to the age limits certain lenders have in place. Some won’t lend to anyone over 75, others over 85 and a minority have no age caps at all.

How much retirement income your parent has through their pension or other investments will play a part in the amount you can borrower. And with all of this in mind, seeking specialist advice is vital to boost your chances of finding the most favourable deal on the market.

Can I get a mortgage if I already have one with an ex-partner?

The short answer is yes, however as with any joint mortgage it is subject to you meeting the lender’s affordability criteria and it may restrict the amount you can borrow.

This is because lenders will look at the monthly commitment on the other property and deduct it from your disposable income. The team of experts we work with will be able to advise you on which lender will suit this not uncommon situation.

Another scenario that you may find yourself in is having an ex-wife or ex-husband still on a mortgage. The problem here is that if you should die, your half could go to your ex, which may not be an ideal situation if you have children or a new partner.

What happens to a joint mortgage after a divorce or separation?

If you took out a joint mortgage with a partner but have since split up, you’re both still liable for making sure the monthly repayments are taken care of.

Most experts will recommend speaking to your lender after a separation to fill them in on what’s happened. Many mortgage providers are sympathetic in these circumstances and may consider granting you a payment holiday to make things easier in the short term.

Longer-term options include buying out your ex-partner or selling the property. Our guide to divorce and mortgages has more information, or you can read our article on joint mortgage transfers to find out whether you can transfer your mortgage into a new type of arrangement.

Can I get a joint mortgage with my brother or sister?

Yes, absolutely. Some lenders are more than happy for joint mortgage customers to apply with a sibling, parent or even a friend. These products aren’t limited to couples!

Can I still get a joint mortgage if one of us has bad credit?

Yes, but your choice of lenders will likely come down to the cause, severity and age of the credit problem in question. Specialist bad credit mortgage providers are often called for in these circumstances as some mainstream lenders aren’t prepared to take on the extra risk.

For joint mortgages where one applicant has severe bad credit, some customers choose a joint borrower, sole proprietor mortgage, as this allows two people to go on the mortgage while only one (the person with good credit) is named on the title deeds.

What is a joint venture mortgage?

This is similar to most joint mortgages in the UK, except that usually, two or more investors will pool their resources to buy and sell property for profit. Mortgage joint ventures are based on shared risk and reward. If you base your joint venture mortgage on a 50/50 split of profits, then you are also exposed to 50% of the losses as well.

Can I get a mortgage if a financial associate has adverse credit?

Yes, potentially. This works similarly to getting a joint mortgage with a spouse who has bad credit. Some lenders might take your financial associate’s credit history into account when assessing your application, even if they are not a joint applicant on the mortgage.

But the good news is that there are plenty of lenders who will consider these applications on a case-by-case basis and they may still consider you for a mortgage with a favourable interest rate, despite your associate’s bad credit. This is especially true if the associate has no involvement in your mortgage application.

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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 OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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