Joint mortgages
A joint mortgage allows two or more people to buy a property together - learn how they work and if a joint mortgage is the right option for you.
What is a joint mortgage?
A joint mortgage is a mortgage that two or more people can take out together to buy a property. They will then own the property together and share the responsibility for making the monthly mortgage repayments.
Typically, they are taken out between spouses or partners. However, it is possible to have a joint mortgage with a family member or friend. Most joint mortgages are between two people, but some lenders allow up to four people to take out a mortgage together.
How do joint mortgages work?
They work in the same way as a regular residential mortgage. The application process is broadly the same, but all applicants will need to provide evidence of their income and go through a credit check.
Even if one applicant earns more than the other or provides the majority of the deposit, the responsibility for repaying the loan is shared 50/50.
However, you can set up a joint mortgage and the joint ownership of a property in two ways: Joint tenants and tenants in common.
This option means that each applicant owns an equal share of the property. For example, as joint tenants, each applicant would own 50% of the property if there were two owners or 25% each if there were four owners. It also means that:
If one owner of the property dies, their share automatically passes on to the other owner or owners
When you sell the property, profits from the sale will be split equally between the owners
If you remortgage, you will need to move to another joint mortgage
Joint tenancy is what most couples, especially married couples, choose when taking out a joint mortgage.
If you choose to borrow on a tenants in common basis, each owner can own a different share of the property. This is usually based on how much each has contributed to the deposit or pays towards the monthly repayments.
In this case, if one of the tenants dies, their share of the property will form part of their estate. If they want their share to pass to the other owners, they will need to make this clear in their will.
You can choose how much each tenant owns yourself. For example, if one tenant provided all of a £50,000 deposit on a house that cost £250,000, you could reflect this contribution by agreeing to a 60:40 split in their favour.
How much can I borrow with a joint mortgage?
You can usually borrow more with a joint mortgage because you can combine your incomes.
Most lenders allow you to borrow around 4 or 4.5 times your joint income, so if both applicants earn £30,000 a year, they could potentially borrow between £240,000 and £270,000.
The exact amount you’ll be able to borrow will depend on your affordability and things like:
All applicant’s credit records
Your outgoings and debt
The size of the deposit you’re contributing to your purchase
To get an idea of what you can borrow, use a joint mortgage calculator.
What is a joint borrower sole proprietor mortgage?
A joint borrower sole proprietor mortgage (JBSP) is a mortgage that you enter into with another person, usually a parent or close family member. Only you will own the property, but they will share the responsibility for the mortgage repayments.
This is typically used by parents who want to help their children buy their first home without taking full ownership of the property. If you are unable to make the mortgage payments, the other mortgage holders will be liable to cover them.
The mortgage holders who do not own the property will not appear on the title deeds and, therefore, have no legal claim to the property or any increase in its value.
Once the initial mortgage deal ends, you can switch to a mortgage in your sole name if you can afford to do so.
JBSP mortgages are similar to guarantor mortgages, where a family member agrees to cover the mortgage payments if you cannot. In this case, they provide their property or another asset as security against the mortgage.
What are my joint mortgage separation rights?
If you have a joint mortgage and you and your partner separate, there are lots of options available.
You could choose to sell the property and split the money, buy your partner out or pay off the mortgage.
If you plan to sell the home, both you and your partner need to give written approval before you can put it on the market.
Both partners on a joint mortgage need to keep paying the mortgage until a formal agreement is in place. If you do not pay on time, it will affect both you and your partner’s credit score.
If your partner stops paying, tell your lender and get legal advice. Your lender may be able to offer a payment holiday if you’re struggling.
Your mortgage options if you separate from your partner
You have a few options if you and your partner separate and you have a mortgage between you.
If you agree that you will continue living in the home, you could buy your partner out of their share. This is common if you plan to stay in the family home with children.
You can then remove your partner’s name from the mortgage and put the mortgage in your name.
The amount you will need to pay depends on what you agree with your partner or through a solicitor.
If you decide to split the value in half, then you would work out how much you’ve paid off and divide this in two. You’d give your partner that amount plus what they put down as a deposit.
So if you’ve paid off £50,000 together and your partner put down a £10,000 deposit, you would give your partner £35,000.
You could remortgage to get the money to buy out your partner.
Selling the home is one of the easiest ways of coming to a fair agreement. When you sell, you’ll either pay off the rest of the mortgage or sell and split the rest of the money.
If the amount you owe is more than the value of your home, you may have to split the debt between you.
You could keep your home and transfer part of its value to your partner.
This means you’d own the home, but your partner would get a percentage of the property’s value if you later sell it.
If you’ve almost paid off your mortgage, you and your partner may decide to keep paying until it’s paid off.
You could then split the money when you sell the home.
If you separate from your partner:
try to agree on what you and your partner plan to do with your home
tell your lender your situation, especially if you’re planning to buy out your partner
continue making your usual mortgage repayments
Is it a good idea to get a joint mortgage?
If you’re married or in a long-term relationship, getting a joint mortgage will seem like the logical thing to do. It will allow you to borrow more and ultimately buy a more expensive home.
However, there are downsides to having a joint mortgage that you should be aware of. Here are some of the pros and cons of joint mortgages.
Pros and cons of joint mortgages
Joint mortgage pros
Borrow more
Boost your borrowing power, enabling you to buy a more expensive property
Larger deposit
Combining your savings means you can put down a larger deposit to access better mortgage rates
Shared liability
Sharing the liability of the repayments can reduce the risk of falling behind and going into arrears
Joint mortgage cons
Credit score
If one applicant has a poor credit score, it can mean your application is rejected and damage the other applicant’s score
Shared liability
Sharing liability also means that if the other applicants stop contributing to the repayments, you will be liable to cover them on your own
Hard to split
They can be complicated to separate if one of the owners wants to sell their share of the property
Our expert says...
“More than half of first-time buyer mortgages are now joint applications, which isn’t surprising as they allow you to borrow more in a competitive housing market.
Before you take out a joint mortgage, it’s important to understand how they work and the pros and cons. Our expert advisors can help talk you through your options and help you find the right joint mortgage.”
Joint mortgages FAQs
Traditionally, a joint mortgage is for two people; however, most mortgage lenders will allow more. Getting a mortgage for three or four people is possible, but this is the maximum most lenders will allow.
Each person who is part of a joint mortgage will have a legal claim to the ownership of the property.
If you have a joint tenancy, each buyer will have an equal share of the property, so this would be 50/50 if two people are on the mortgage.
If you have taken the mortgage out on a tenants in common basis, the ownership may not be equal, depending on how you have agreed to split the property. For example, one tenant may own 25%, and the other owns 75% of the property.
One person can cover all the payments on a joint mortgage if they can afford to. Mortgage lenders don’t mind where the money comes from, provided the monthly repayments are made on time.
When you apply for a joint mortgage, both parties will need to provide affordability evidence. However, they will look at the combined income, so each applicant doesn’t need to be able to cover the payments individually.
If one of the holders wants to leave the mortgage, for example, if a relationship breaks down, it is possible to get out of it.
One option is to buy the other person out so the property can be transferred into just one name. However, this is likely to be expensive, and they will also need to be able to pay monthly payments on their own.
Alternatively, you could agree to sell the property and split the proceeds of the sale between you. It may also be possible to keep the property but rent it out, sharing any rental income between you.
If you decide to rent the property out, check this with your lender first. Most residential mortgages do not allow you to rent the property out, and you may need to remortgage to a buy-to-let product first.
Any new borrowing you apply for and take out will be recorded on your credit report. If you keep up with the repayments, having a joint mortgage can have a positive impact on your credit score.
Taking out a joint mortgage also means entering into a financial relationship with the other applicants. This means your credit report can become linked to them, and their financial actions could affect your rating.
For this reason, it’s best to only take out a mortgage with somebody you trust and who has a good credit record.
It’s possible to get one with friends. Most lenders don’t stipulate that you need to be in a relationship or related to take a mortgage together, provided both applicants meet the eligibility criteria.
Each applicant will need to provide evidence of their income and successfully pass a credit check. They will also have to meet any other requirements, for example, be below the lender’s maximum age limit, which can be anything from 65 to 90.
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