Traditionally when it comes to buying a home, we only hear of couples or those on their own who have saved up enough for a deposit before applying for a mortgage to help them get onto the property ladder.

However, there are other options for prospective homebuyers if taking on a mortgage alone isn’t possible or they’re looking to improve affordability.

Did you know that you could apply for a joint mortgage with parents, friends, or even business partners? We caught up with Brian Murphy, Head of Lending at Mortgage Advice Bureau, about joint mortgages.

 

What is a joint mortgage?

A joint mortgage, sometimes known as a shared mortgage, involves two or more people applying to borrow money to buy a home – normally, this would be a couple, so in fact a substantial number of mortgages are joint in nature. But you can have a joint mortgage with anyone willing to share the responsibility of owning a property with you, including a spouse, partner, family members, friends, and even business partners.

There are lenders who offer shared mortgages for up to two, three or even four people. This means you will all own the property and be jointly liable for paying the mortgage.

How does a joint mortgage work?

The joint mortgage application process may differ depending on the relationship between the borrowers. If you’re applying with a spouse or partner, lenders will typically assess your combined income, credit score, and debt-to-income ratio to determine whether you can afford the mortgage repayments.

If you are applying with family members or friends, lenders may require additional documentation, and may also assess each borrower's individual financial situation.

The amount borrowed on a joint mortgage will be based on the combined income of all applicants, and the lender will require the borrowers to sign a joint mortgage agreement.

 

What are the advantages of a joint mortgage?

With rising costs, it has become more common for people to buy a house or apartment together and with this comes plenty of benefits.

The main benefit is that it can increase the amount buyers are allowed to borrow as it’s based on more than one person’s income. For some people, this may be the only way to get on the property ladder. A joint mortgage can be a great option for individuals who want to split the costs and responsibilities associated with owning a property.

Are there any risks?

Regardless of who you’re applying with, it’s important to consider the potential risks of joint ownership and have a clear understanding of the mortgage agreement before applying.

Both applicants are equally responsible for the mortgage repayments and are jointly liable for any missed or default payments. In this instance, if one of the borrowers cannot meet their share of the payment, the other will have to cover the amount in full. 

However, in the event of the relationship between the borrowers breaking down, there are several options available. The property can be sold, and the proceeds can be divided between the borrowers based on their contributions.

Alternatively, you can change the mortgage from joint to single, where one borrower may be able to buy out the other's share of the property, or the property may be transferred to one borrower's sole name, subject to the lender's approval. This does mean that you would be applying for an entirely new mortgage, so the same affordability checks would apply.

 

Want to find out more about joint mortgages?

To find out more, speak with the Cala sales team for your chosen development who can explain more about joint mortgages and recommend a mortgage adviser to assist you, or visit www.mortgageadvicebureau.com for other helpful mortgage related advice.

 

Explore our range of new build homes to get started or explore our first time home buyer hub to help you feel more informed about the exciting journey ahead of you.

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

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