Beginners Guide to Joint Mortgages

A joint mortgage refers to a loan which is taken out by two or more people for the purposes of purchasing or remortgaging a property. This tends to be more favourable as a combined income means the mortgagees will be able to finance a property that is more expensive. Each party to the mortgage will have a legal claim to ownership of the property.

A joint mortgage is sought by the same means as a traditional mortgage, the only difference being, the incomes and credit ratings of all parties are considered. If one party had a poor credit score, this will negatively affect all other mortgagees. It may be worth consulting with a mortgage broker to allow you to find the best application.

Who is eligible?

A joint mortgage is usually considered by  by either married or unmarried couples to provide a means for them to live together. There is no specific guidance on who can take a joint mortgage. The only requirement is that all parties consent to the mortgage and agree to any responsibilities pertaining mortgage repayments.

It is also possible to obtain a mortgage where one of the mortgagees will not be listed as an owner of the property, this is referred to as a joint borrower-sole proprietor mortgage.

What are the advantages?

The immediate benefit to a joint mortgage is that there will be multiple incomes being used collectively, towards monthly repayments a and any deposits. This will allow you to obtain a higher priced home than you would typically be eligible for on a solo mortgage. This can be very useful for First Time Buyers who wish to purchase a property. Besides this, depending on your independent arrangements, it will usually allow for things like stamp duty, insurance, legal fees and even household bills to be shared.

Are there any disadvantages?

The primary disadvantage of taking out a join mortgage is that you will have to rely on someone else, or multiple people, to contribute towards mortgage repayments.

If one  any party defaults on a repayment the others will have to pay for them to avoid incurring a penalty. It is vital that you trust the people you are taking out this mortgage with to keep up with the repayments. Good indicators to look for are their ability to save and whether they are prone to being in debt or late payments. You should make arrangements for in the unforeseen circumstances one person is unable to meet their repayment.

You will need to plan how you will split other expenses so one person doesn’t end up being responsible for more than they can afford.

If you are looking to purchase a property, please contact us for more.