Joint Mortgage
Joint mortgages refer to mortgage loans which are taken out by more than one person, rather than a single applicant. This will in most cases be two applicants, but some lenders may allow a larger group to borrow together – usually no more than 3 or 4.
This type of mortgage can be useful if wanting to buy a property with a significant other such as a partner or spouse, or another family member/friend.
A joint mortgage can also be used by companies wanting to buy a commercial property for business use, with several directors sharing the responsibility for the building mortgage.
Joint mortgages can be a great way of lowering costs, both by sharing funds for the deposit amount and splitting the cost of the monthly repayment.
About joint mortgages UK
A joint mortgage can be a great option for two (or sometimes more) people looking to invest their money together in a property. This is because their savings can be combined to create a decently sized deposit a lot faster than with a single person saving alone.
This can allow people to get onto the property ladder far more quickly, as well as having the bonus of sharing costs such as valuation fees, stamp duty etc. All the monthly repayments will also be cheaper as that cost is split too, meaning much lower monthly expenses for all involved.
The general process for applying for joint mortgages will be the same as for any other type of mortgage. The main difference is simply that there are multiple people applying for the same loan together, meaning the income and financial history of all applicants will be evaluated before the loan can be approved.
Other than this, the rest of the process should be the same as with any other mortgage. You will need to save a deposit, find the property, and decide on the mortgage terms and preferred interest type (fixed-rate mortgage, variable rate mortgage etc).
At this point it may be worth consulting with a mortgage specialist such as us. We will be able to point you in the direction of the right lender for the mortgage type you require. There are a lot of great lenders currently on the market offering excellent deals for joint mortgages.
We can also ensure the lender is the right fit for your budget and will be able to accommodate any other financial issues such as previous poor credit history.
When more than one person is applying for the same mortgage, the bank, building society or other lender will check the suitability of each individual applicant before approving the loan. They will conduct the same checks as with any mortgage deal. This includes requesting information about things such as:
- Credit history and credit score
- Affordability checks
- Property value (is the amount of loan requested correct?)
- Monthly income vs expenses
- Annual income
Once all relevant information has been gathered, it may take several weeks for the mortgage lender to come to a decision as to whether to approve the loan.
If the mortgage provider does decide to decline for any reason, it is worth consulting with other lenders. Even if one lender is unwilling to supply a loan, it does not mean all lenders will be the same.
For further advice on how to apply for a mortgage, check out our extensive guide or you can check out our dedicated pages about buying a home or remortgaging your property.
Joint tenants vs tenants in common
There are two ways in which property equity can be split in a shared mortgage deal.
There are two categories of joint mortgages and which of these choices is most suitable will require conversation and agreement between all borrowers involved in the mortgage. The two choices are:
- Joint tenants: This refers to when all borrowers have an equal share of the equity in the property. This is commonly used when a joint mortgage is taken out to buy a home for a couple in a long-term relationship. You cannot change or sell your share of this loan without the other person’s permission.
- Tenants in common: This refers to when each borrower owns a different percentage of the property. This will involve drawing up legal documents with a solicitor, stating the percentages each person owns. This is most often used if one person has contributed notably more funds to the deposit for the property.
If selling the property at a later point, anyone who has a joint tenant set up will each receive equal shares of the profits from the sale.
Anyone who has set up the mortgage as a tenants in common agreement, will receive the profits as per the percentage share specified in the original loan agreement.
Joint borrower sole proprietor mortgage
A joint borrower sole proprietor or JBSP mortgage allows a person to contribute to a mortgage without being classed as a co-owner. It is important to remember though that even though they are not classed as a co-owner, they still have a legal claim to the property.
This arrangement can be useful for when a parent, guardian or other family member wants to help support a mortgage application, particularly for a first-time buyer. This allows the buyer to own the property while still receiving additional help with the monthly repayments.
The main borrower (often the child of the other person) will have their name on the property deeds as a sole owner and be responsible for paying fees associated with the purchase.
This is a similar arrangement to a guarantor mortgage except in that case the guarantor will only take over the repayments if the borrower defaults on their payments.
A JBSP mortgage ties both parties into contributing to the repayments right from the start of the deal. Unlike with a JBSP, a guarantor will have no claim to the property legally, even if they end up having to cover the repayments.
There is also the option for the parent/guardian/other contributor to decrease their share of the payments over time, as the other mortgage holder becomes more able to cover the costs on their own.
Removing name from joint mortgage UK
There can be various reasons to take out a mortgage with another person, only to later want to remove yourself from this shared commitment.
This can happen quite commonly during the breakdown of a marriage or long-term relationship, where the couple own a home or other property jointly. There are usually a few options as to how you can get out of joint mortgages.
The most obvious option in a lot of cases would be to sell the property and use the equity gained from the sale to buy both parties out of the mortgage. It is important if doing this to consider there can be charges incurred from leaving a mortgage early, such as early repayment charges (ERC).
However, in some situations one partner may wish to continue living in or owning the property and the other will not.
A joint mortgage can also be taken out to buy a commercial property for business purposes. If one borrower has decided to leave the company, this can also lead to the need for one party leaving the mortgage.
The first thing to do in this situation would be to contact the lender the mortgage has been arranged through and check what the next steps are per their policies.
The mortgage can be changed so it is now only in one of the borrower’s names, known as a ‘transfer of equity’. This process can also be used to switch the name on the mortgage to another person entirely such as a new partner, family member or friend.
In certain cases, the lender may not agree to this transfer. In this situation there is always the option of a remortgage to another lender who can accommodate this.
When considering transferring deeds or buying out of a mortgage, it is best to consult a solicitor to ensure all legal aspects are properly taken of.
Mortgage advice for joint mortgages
Most lenders across the UK will accommodate joint mortgage requests. This is providing that all applicants pass the affordability and eligibility checks and the any other considered factors that would usually go into approving a mortgage.
The key to securing the best possible mortgage in any case is research. It is a good idea to find out what joint mortgages are currently available on the market and assess which one is the most suitable for what you need.
A couple looking to buy a home with a joint mortgage will most likely have different mortgage requirements than business partners wanting to take out a joint mortgage.
It is best to sit down with the other person involved in the mortgage application and solidify exactly how much your budget is and what type of mortgage seems the most appropriate.
There are definite benefits to a joint mortgage, most of these financial. These are:
- Faster to get on the property ladder due to sharing funds for the deposit
- Cheaper monthly repayments each as the overall amount is split
- Sharing the expense of additional fees and costs such as brokers fees and stamp duty
However, it is also worth remembering:
- You will be tied into a joint obligation with another person for a very extended time period (average mortgage terms can be 10, 25 or even 40 years)
- If one of the people on the mortgage is unable to pay, the responsibility to cover their half of the repayments will fall onto the other person
- If the property is sold at any point, any profit/equity will need to be divided
For further advice on the pros and cons of joint mortgages and how to secure one, speak to a specialist. A mortgage specialist will be best equipped to find the best lenders and most competitive rates currently available for a joint mortgage.
Mortgage broker for joint mortgages
With any mortgage type, there will sometimes be one lender offering better terms or rates compared to another. This will apply to joint mortgages as well. Knowing which lender the best choice is can often the harder part of the application process – especially with there being so many options.
This is where mortgage brokers and specialists come in. Specialists such as us can source the best mortgage deals and rates across a variety of lenders. This includes mainstream banks and building societies as well as more specialist lenders.
We have over 20 years of experience in helping homeowners and property investors across the UK secure great deals on their mortgages, with many of these applications being for joint mortgages
Talk to one of our specialists for expert advice on how to secure a great terms and pricing with your joint mortgage.
Best joint mortgages
The best joint mortgage will be dependent on what the mortgage is being taken out for. A joint mortgage for a couple wishing to buy a home may suit certain terms and interest rates better than a joint mortgage taken out for business purposes.
It is a good idea to figure out what the most preferential interest rate type would be for your loans, as well as your monthly budget and how long you would like the mortgage term to be (10 years or 25 years for example).
Doing this before applying will save a lot of time and hassle. You will go into the process knowing exactly what you are looking for, opposed to deciding part way through an application you would prefer a different mortgage type. If this happened, it could cause major delays to the purchase of the desired property.
If unsure of what mortgage or interest rate type is right for you, talk to a mortgage broker or specialist. A specialist will be able to answer any questions and provide relevant information about any type of mortgage – joint mortgage applications included.
Joint mortgages for self employed
If one or more of the people applying for a joint mortgage are self employed, this may raise questions as to how this will affect the application.
Applying for a mortgage whilst self employed can still be a straightforward process, there are just a few additional factors to bear in mind. Evidencing your income will be slightly different for example.
A lender will usually ask a self employed person several questions as part of assessing their financial history and suitability for a loan. These include:
- How long you have been self employed for
- Can proof of income be provided?
- Do you have an accountant and up to date accounts?
- Is the business financially stable and profitable?
- How is income received (salary, dividends etc)?
This is simply so the lender can assess whether there is any risk associated with lending to you, in case you are likely to default on your repayments. Additional questions are a standard practice with this type of income and are nothing to be concerned about.
The lender will also have several requirements and evidence needed to confirm your current financial situation. The lender may request information such as:
- 3 months worth of bank statements
- A reference from your accountant
- Evidence of profits and dividends
- 2-3 years worth of accounts (if trading for that long, if not just provide as many as possible)
- Tax year overview or SA302 forms
All the above will need to be taken into account during the application process, especially if both applicants are self-employed.
Being self employed should cause no issues in securing a mortgage for most people. The lender will just want to review all the relevant additional information provided before making any decisions.
For further information on self employed mortgages CLICK HERE.
For information on evidencing income with an SA302 CLICK HERE for our guide.
Joint mortgages with bad credit
A main point of advice for anyone thinking about a joint mortgage would be to bear in mind while there are considerable positives to this type of mortgage, there are also disadvantages.
It is important to remember for example that whilst all costs will be shared, this also ties everyone involved into a joint legal obligation to repay the loan. If one person defaults, the other person or people on the mortgage will be responsible for covering their share of the repayments.
Another very important consideration is that something that may negatively affect the mortgage application for one of the applicants will now affect all of them. If one of the applicants has a particularly poor credit score, this can delay the overall application process or even cause the application to be denied.
Factors such as poor credit should not be an automatic barrier to accessing a mortgage, but it is worth assessing the financial history of all applicants involved before submitting the application. If one or more have factors that may affect the mortgage process, it could be worth speaking to a specialist lender that would be better suited to these circumstances.
There are many lenders in the UK that can be accommodating of factors such as poor credit or may be better suited to joint mortgage deals in this instance. We have access to several specialist lenders, well suited to providing mortgages for those with a poor credit history. These are:
- Accord Mortgages
- Aldermore
- Bluestone
- Kensington
- Paragon
- Precise
- The Mortgage Lender
In some cases, mainstream lenders may agree to offer a mortgage as well, particularly if it is only one of you that is affected by bad credit. If unsure on what your best mortgage option is, it is a good idea to speak to a broker or mortgage specialist for expert advice.
If concerned about poor credit history affecting your mortgage deal, CLICK HERE for more information on this topic.
Best mortgage lenders for joint mortgages
There are a huge variety of mortgage lenders operating across the UK currently. This is a combination of banks, building societies and more specialised lenders. This is great as this means that there are a lot of options for prospective homeowners and investors to choose from.
Most of these lenders will accept joint mortgage applications, as applying with another person is a routine occurrence in the UK.
It is very common for two people to apply for a mortgage together so that should usually be a very straightforward mortgage to access, and still through mainstream lenders.
If wanting to take out a mortgage as a slightly larger group, a specialist lender may be more appropriate. The maximum amount of people able to be on a mortgage application is 4, corresponding to the largest amount able to be on a property deed.
How does income work for joint mortgages?
When multiple people are applying for a mortgage, the lender will want to examine the income of all involved.
Generally, a lender will approve a mortgage loan based on the amount requested being at most around 4x the amount of the borrower’s annual income. Combining resources can be very beneficial financially because of this.
Often you will be able to borrow significantly more, due to your combined income amount being much higher than a single source of income. Access to a larger loan amount means you may be able to buy a bigger property or potentially one in a more desirable area.
However, it is worth remembering that anything that may have affected a single mortgage application for one of the applicants, will affect the joint application as well. If one applicant is in debt or has a poor credit history, this could certainly have an impact on the overall application.
It is best to have an honest discussion about previous debt or other financial commitments that may potentially impact the application process.
If worried about any of this, a specialist will be able to further advise as to whether there may be any areas of concern in relation to a mortgage application. They will then be able to find a lender or lenders best suited to approving applications with these factors not being an issue.
Buy to Let joint mortgages
Buy to let mortgages are specifically designed as loans intended for the purchase of property that is then rented out to a third party – ideally resulting in a profit.
It may be that yourself and your partner or other family member/friend have decided you would like to invest in property or are in fact already landlords or property investors. A fair question would be whether you can take out a buy to let mortgage jointly, or if only one of you will be able to apply solely.
It is absolutely possible to jointly secure a loan on a buy to let basis. In fact, it can be very beneficial to split the responsibilities of a buy to let mortgage, both in terms of cost and obligation to maintain the property.
A buy to let mortgage can be a great way to guarantee yourself an additional income stream. This can be through rental income or if the property is renovated and later sold for a profit.
If the repayments are affordable long term this can be a great group investment for yourself and a partner or small group. Make sure to be certain though that your combined income will be enough to afford the monthly repayments, as well as any other pre-existing bills and commitments.
For more information on buy to let mortgages CLICK HERE.
Mortgage specialists for joint mortgages
Essential MORTGAGES are specialists in all types of mortgage deals, joint mortgages included. We have access to a dedicated panel of over 50 lenders UK-wide who can provide exceptional rates for those wishing to take out a mortgage.
We can check mortgage deals across all these lenders to ensure we pair you up with the most suitable loan for your needs. Anyone securing a mortgage through us will have access to the best mortgage and most preferential rates possible. You will have a dedicated expert at hand to offer expert advice throughout the entire application process.
Call and speak to one of our specialists at 0330 118 8188 or CLICK HERE for more advice on accessing a great joint mortgage deal.
Useful resources
Citizen’s Advice – Buying a home
Gov.uk – Joint property ownership
Gov.uk – Jointly owned property trust: registration (JO)
Gov.uk – Stamp Duty Land Tax: transfer ownership of land or property