Whether you’re considering buying a home with a partner, friends, or even family members, joint mortgages are there to make the process that bit easier. 

In this article we discuss the ins and outs of a joint mortgage and why splitting the costs and commitments of a property can be a beneficial decision.

 

What is a joint mortgage? 

 

A joint mortgage is a mortgage that allows you to buy a property with up to three people, it’s commonly used by two borrowers in a relationship. A joint mortgage allows you to combine your money and increase your overall deposit, as well as split the cost of monthly mortgage repayments, creating ease throughout the duration of your mortgage. 

A joint mortgage allows all parties involved to be held responsible, not just a sole person. Anyone is eligible for a joint mortgage, first-time buyer or not, but this could lead to you paying stamp duty if you purchase a property with a non-first-time buyer. 

 

What are the benefits of having a joint mortgage? 

When purchasing a home, a joint mortgage can bring several benefits, including the ability to borrow more money from the lender as your average household income increases. 

By having multiple people involved in a mortgage, it allows you to display a more responsible and trustworthy persona to the lender for repayments, as there are two or more of you having to meet the requirements of the mortgage. 

By having multiple people involved, it may allow you to place a larger deposit down, decreasing the cost of your monthly repayments and increasing your overall equity in the property. 

 

How does a joint mortgage work? 

A joint mortgage has the same principle as any regular mortgage: paying a deposit and meeting monthly repayments, but the lender will see your deposit and household income as one, not individually.  

When applying for a joint mortgage, you will have to decide with your co-owner(s) how you will split the equity of the property. 

 

A joint tenants mortgage means that all the borrowers will have equal rights over the property, and if you were to sell it, you would split the profits equally. Most joint mortgages act as one owner, with an equal split of the property and equal rights. 

When friends buy a property together, they typically opt for a tenants in common mortgage. This mortgage is where each person owns a different amount of shares in the property, which can be split however they wish. This will be in the deed of trust detailing each person’s ownership percentage. 

When choosing which type of joint mortgage you are going to opt for, it is important to understand which type suits your situation. 

 

Leaving your joint mortgage 

The main reason for wanting to exit a joint mortgage is usually because the relationship between yourself and your partner or co-owner(s) has broken down, and sometimes it can be hard to identify who is left accountable for the mortgage. 

 

Who’s responsible? 

You and the other borrower(s) continue to stay responsible for each monthly repayment until your name is not on the mortgage. Even if one of you decides to move out, you are both still liable for the mortgage and financially linked together. 

 

How can you leave a joint mortgage? 

 

Sell the property  

The easiest way to walk away from a joint mortgage is by selling the property. This allows you to split the profits from the property and restart your mortgage journey. This method is cost-effective and simple, all while being achieved in a shorter timeframe. 

Buy your partner out 

Buying your partner out of the joint mortgage is another method, but a slightly more complicated route. This means that the entire equity of the home will be transferred over to the remaining borrower(s), but it also means you must meet new requirements, which can sometimes be harder to meet as the overall household income decreases, which could also lead to the lender pulling out. 

Add a new name to the mortgage 

Another way to maintain the joint mortgage could be by adding a new name. This encourages the lender to allow you to keep your mortgage and property, as multiple incomes are more convincing. There is a fee to change a name on a mortgage, as you have to pay a solicitor to cover the costs of the legal work and pay potential lender and registration fees, so changing the name on a mortgage could set you back. 

 

Contact us today for more information on how you can start your joint property journey