Joint Tenants vs Tenants in Common

Want to know which is the best option for you - Joint Tenants or Tenants in Common? Read on to find out more.

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

Home Mortgage Application Joint Tenants Vs Tenants In Common
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 13, 2024

If you are considering buying a house with another person, two types of ownership structures are available: joint tenants and tenants in common.

Here, we look at the difference between the two and why you may choose one option over the other. We investigate whether it’s possible to switch once you have already bought a property and the tax implications of each. Finally, we identify how a broker can be helpful when choosing the right ownership and mortgage type for you.

What’s the difference between joint tenants and tenants in common?

While both options are a form of joint ownership, joint tenancy is when two people, or more, equally own 100% of a property. For tenants in common, two or more people can own a share of the property. Importantly the share does not have to be equal – so a 60/40 split for example.

For both tenancy types, all co-owners have equal rights – even when tenants in common own different amounts. However, all owners are responsible for the mortgage, so if one person cannot make their payment, it is the responsibility of the others to make up the shortfall – even if they have a smaller share.

How properties are treated when a co-owner passes away differs with each type of tenancy too.

For joint tenants, there is something called the ‘Rights of Survivorship’. It means that as all tenants own 100% of the property, should one of the tenants pass away, ownership automatically passes on to the remaining owner(s). For tenants in common, if an owner were to die, their share would not automatically go to the other tenant(s). It goes to the person nominated in their will.

Applying for a mortgage as joint tenants and tenants in common

You can technically get a separate mortgage if you are buying a property as tenants in common. Most of the time, though, lenders prefer you to have a joint mortgage.

With a joint application, you can often borrow more thanks to a combined, higher, income. Providers typically lend 4-4.5 your annual salary and for joint applicants both incomes can be used for this calculation, usually meaning you can borrow more for your mortgage. Plus, your deposit amount may be more too, which can improve your loan-to-value (LTV) ratio, making you eligible for better rates.

If you’d like to see how much you could potentially borrow for a joint mortgage, use our calculator below.

Mortgage Affordability Calculator

Use this calculator to determine how much you could potentially borrow for a mortgage, based on the typical salary multiples used by most UK lenders.

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You could borrow up to 

Most lenders would consider letting you borrow

This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.

Some lenders would consider letting you borrow

This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.

A minority of lenders would consider letting you borrow

This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.

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A few things will still affect a joint application, regardless of tenancy type however.

  • Bad credit: If one applicant has bad credit issues in their past, they may find that this affects the entire application.
  • Stamp duty and first-time buyers: All applicants, whether tenants in common or joint tenants, need to be first-time buyers to take advantage of lower stamp duty rates.
  • Income source: It’s not always an issue, but getting a mortgage when self-employed can be more complicated. If one of the applicants runs their own business, it may potentially affect how much the joint mortgage could be.

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Why choose one option over the other?

There are advantages and disadvantages to both types of ownership. It’s important to consider all aspects before buying a property with another person, in relation to your own needs and circumstances.

Why choose joint tenancy

A joint tenancy is the most straightforward way to purchase a home with someone. Couples often choose this option due to the nature of their relationship. Plus, it is a comfort to know that the property will go to the surviving spouse when the other sadly dies.

The downside: As you don’t stipulate how much deposit you paid, or how much of the repayments you covered, if you were to sell the property and go your separate ways, the proceeds would be split equally. Plus, you cannot leave your ‘share’ to a third party if you pass away. This may be an issue for couples with children from previous relationships.

Why choose tenants in common

People buying with friends or family may find this option a better fit.

The biggest advantage is that you can detail from the outset how much money you put in and therefore how much you own. It means you will always be able to recoup your portion of the proceeds from the property’s sale. Plus, you can leave your share of the property to another person in your will should you wish.

The downside: One of the main problems with tenants in common is that your fellow owner could sell their share to anyone, and do not need your permission – though if you decide to sell the property itself, all tenants must be in agreement. Plus, there is no automatic transference of ownership upon your death, which you may eventually want.

How a broker can help you choose the right tenancy type

Given the advantages and disadvantages of both ownership structures, talking through both options with a broker can be extremely helpful.

A specialist broker will know how these types of tenancy can impact the mortgage product you can, or should, select. It means they will know what tenancy type is the most appropriate for your final mortgage choice.

They will then be able to advise you accordingly on the best mortgage from the most suitable provider for your needs. They will help you find a product that lowers your monthly repayments as well as guide you through the application process – improving your chances of being approved the first time.

Contact us today so we can put you in touch with a mortgage specialist in this area.

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Can you switch from one type to the other?

Yes, you can. This can be beneficial in a number of scenarios, though the most common reason is to reflect a change in the relationship between two people.

For example, if you divorce or separate from your fellow joint tenant but don’t want to sell the property. Changing to tenants in common is called severance of joint tenancy. Your solicitor can submit an application for you and you can make the change without the other owner’s agreement. Moving to a ‘tenants in common arrangement’ means that ownership will not automatically go to your ex-partner if you pass away. It can be a good means, therefore, of protecting your investment.

However, if you were to marry your fellow tenant in common, you may want to switch to a joint tenancy to take advantage of the automatic transfer of ownership. In this instance, you need the agreement of any other joint owners. Again, your solicitor can make the application for you and you will need to complete a new trust deed to evidence the change.

Depending on the situation, you may or may not need to remortgage depending on your product and its terms and conditions. Working closely with your mortgage lender and a broker can help you determine what you need to do in your specific circumstances.

Plus, whilst technically not a switch, you can also amend share amounts for tenants in common arrangements, should someone pay more of the repayments or make a big overpayment – thus changing the amount of equity put in.

Tax implications of each tenancy type

With a joint tenancy, there is no inheritance tax due from a surviving owner if the other co-owner sadly passes away.

When it comes to tenants in common, inheritance tax does need to be paid as the deceased’s share of the property will fall under their individual estate. In some cases, that may mean a house has to be sold if the deceased’s estate does not have enough cash or other assets to pay the tax bill.

If you co-own a buy-to-let property, a ‘tenants in common arrangement’ will allow you to pay tax on your exact share of the income. This can help a couple owning a BTL property together to be more tax efficient if they are within different tax brackets.

Get matched with the right broker for your joint purchase

Buying a house is one of the biggest investments a person makes. As a result, getting the right ownership structure is crucial if you are doing it with another individual. You need to think carefully about how tenancy types impact you, and as a result, it can be beneficial to talk through your subsequent mortgage options with a broker. They’ll explain each type of ownership to you in relation to your specific circumstances so that you can decide what’s the most appropriate course of action.

Our free, no-obligation broker matching service will connect you with the best broker for you. Call us on 0808 189 2301 or enquire with us today so we can put you in touch with a specialist.

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Due to having equal rights to the property, tenants must be in full agreement if they want to enter into an equity release arrangement. If, upon the death of an owner, they leave their share to the other tenant, there is typically no impact on the equity release itself.

However, if they leave it to another party, the equity release lender may stop further access to borrowing secured against the property. Speaking with your provider directly is advisable in either scenario.

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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!

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Pete Mugleston

Mortgage Advisor, MD

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