What is a joint mortgage?

What is a joint mortgage?

A joint mortgage is a mortgage that allows multiple people to share ownership of a property, and also share responsibility for paying back the mortgage. Most joint mortgages are shared between 2 people, but some mortgage providers allow up to 4 people to share the mortgage. Each person involved in a joint mortgage can contribute different amounts to the deposit and monthly repayments, but everyone is still responsible for making sure the mortgage is paid back.

If you’d like to learn more about other types of mortgages, you can check out our blog ‘What is an interest only mortgage?’

How do joint mortgages work?

Joint mortgages work in the same way as a normal mortgage, but more people means more savings being contributed to the deposit and making monthly repayments, so they can help you to borrow more than you’d be able to by yourself. This means you could afford to buy a more expensive property.

Everyone on a joint mortgage is responsible for ensuring that the loan is paid back. This means it’s important to make sure you trust everyone that you’re taking out a mortgage with and that they’ll be able to pay their share. There are a few different groups you might consider taking out a joint mortgage with:

• Your spouse
• Close friends
• Relatives
• Business partners
  

If you reach a point when you don’t want to have a joint mortgage anymore, for example if you get divorced, you have a few options:

• One of you can choose to buy out the other and keep up the repayments, provided you can afford it
• You can sell the property and share the proceeds accordingly
• You can rent out the property and share the proceeds.

Types of joint mortgage

There are two main types of joint mortgages: joint tenants or tenants-in-common. There are subtle differences between the two options, so you can find the option that works best for you:

• Joint tenants - Joint tenants all own an equal share of the property, meaning that any money from a sale will be split evenly. It also means that if one of the tenants dies, their share will be automatically passed to the remaining tenants, and can’t be included in a will.
• Tenants-in-common - Tenants-in-common all own an agreed share of the property, which they can choose to sell separately if they want to. If one of the tenants dies, their share can be passed on through their will.

For more information on these types of joint mortgage, you can check out our blog ‘Difference between joint tenants and tenants in common’

There are also a couple of options that you can look into if you’re planning to enter into a joint mortgage with your parents or other relatives:

• Joint borrower sole proprietor mortgage - This is when a family member accepts joint responsibility for the mortgage repayments, but doesn’t have a share of the home ownership.
• Guarantor mortgage - This is when a family member puts up their property or savings as a guarantee that you’ll make your repayments. They have no ownership of the home, but could be liable if you can’t pay back your mortgage.
  

For all of these, you can usually decide how much each person contributes to the deposit and the monthly repayments without it affecting what type of mortgage you have.

How can I get a joint mortgage?

Getting a joint mortgage follows the same process as applying for a mortgage by yourself. You’ll usually need to provide a mortgage deposit, and go through financial checks and a credit check to make sure that you can afford to pay back your mortgage.

Depending on your mortgage provider, everyone on your joint mortgage might have to undergo credit checks. It’s important to make sure that everyone’s credit is strong before you apply, as an unsuccessful mortgage application can bring down your credit score.

How much can I borrow with a joint mortgage?

You’ll usually be able to borrow more with a joint mortgage than you would be able to on your own. This is because mortgage providers will look at your combined income and deposit when deciding how big your mortgage can be. Typically most mortgage providers will offer to lend you 3 to 5 times your combined income. This can vary though, depending on:

• How big your deposit is
• Whether you are self-employed
• Financial checks
• Credit checks

While it can be possible to take out a joint mortgage with up to 4 people, most mortgage providers will only consider the 2 highest incomes when considering how much you can borrow.

Can I get a joint mortgage with an IVA?

An Individual Voluntary Arrangement, or IVA, is an agreement made by a person to make monthly repayments towards a portion of their total debts over a 5 or 6 year period, and then afterwards their debts are written off. It is possible to get a joint mortgage with an IVA, but you might have to take a couple of extra steps.

An IVA can have a negative impact on your credit score, so a joint mortgage can be a great way option, so that a spouse’s or relative’s good credit score could help you buy property. There are a few things you could do to help the process:

• Get permission from your Insolvency Practitioner
• Using a mortgage broker to find a mortgage provider who will approve a mortgage for someone with poor credit
• Prove you have been able to keep up your IVA payments
• Declare your IVA, even if it’s already ended
• Tell the other tenants on your joint mortgage about your IVA
  

If you’re worried you won’t get approved for a mortgage, you can check out our blog ‘What stops you getting a mortgage?’

A few final tips…

There are the last few things to keep in mind about joint mortgages:

• You can transfer a joint mortgage to one person in the event that one of the owners dies, or if you would all decide to sever the joint tenancy and can afford to take on the mortgage payments on your own.
• You can take out a joint mortgage with up to 4 people, but most mortgage providers will only consider the 2 highest incomes when deciding on how much to lend.

Urban Jungle is not a financial advisor and information in this article should not be taken as advice or recommendation.