A joint mortgage is the most popular way for first-time buyers to fund their first home purchase, with more than six in ten opting for one1. While many of these will be couples, a growing number of first-time buyers are choosing to take out a joint mortgage with friends or siblings.
First and foremost, buying with someone else means you can split the costs. Saving enough money to pay the deposit is one of the biggest hurdles faced by many first-time buyers, with joint mortgages allowing buyers to share the burden. Beyond the initial lump sum, teaming up helps buyers by reducing their monthly payments and also means that joint earnings can be used to determine how much can be borrowed.
At its heart, a joint mortgage works the same way as any other residential mortgage, the main difference being, of course, that there is more than one person taking on the financial commitment.
Typically, groups of up to four people can apply for a joint mortgage, though this varies from lender to lender. The big decision that all applicants for a joint mortgage need to consider is whether to be joint tenants or tenants in common:
Before applying for a joint mortgage, it is important to make sure you know the commitment you are taking on. For example, as joint tenants, if one person is unable to keep up with repayments, the others must cover the full amount.
Something else to bear in mind is that, if you decide you want to sell the property, you will need the agreement of all the owners to proceed. Should any of the other parties disagree, the issue could end up in court. Once more, trust and mutual understanding are crucial requisites for being successful joint mortgage holders.
So long as you comply with the normal borrowing standards such as affordability and credit history, it is usually possible for anyone to take out a joint mortgage, but that does not mean that doing so is right for every circumstance. Talk to us about your options.
31 May, 2023