Last reviewed on 27th August 2023 by Martin Alexander (Mortgage Advisor)
Joint mortgages are often taken out by couples who are living together, but can also be used by friends. Buying your home with another person can have advantages. Sharing the responsibility of a significant financial commitment such as a mortgage can alleviate some pressure, making repayments more manageable.
Although there are advantages to sharing a mortgage, it’s certainly not something to rush into. This guide will cover joint mortgages in greater detail and what you’ll need to get approved. Our experts can also help you further if required.
What is a joint mortgage?
A joint mortgage is where a mortgage is in two or more names. Repayments are shared between each named owner, as is the mortgage assessment.
Those sharing the mortgage can decide how the equity in the property is shared. In other words, joint applicants can decide on how much of the property they own. Whether you own equal shares or not, the responsibility of paying the mortgage is joint between the owners.
Who can apply for a joint mortgage?
It’s possible to get a joint mortgage in the following circumstances:
- Married couples
- Cohabiting individuals (friends and family)
- Business partners (buy to let, property investment)
- Civil partners
How are joint mortgages assessed?
Each applicant would undergo a lender’s mortgage assessment. This includes credit checks, income/affordability, expenditure, employment type, and proof of UK residency.
The same mortgages are available to single homeowners and joint owners (subject to criteria). There aren’t any specific mortgage deals for joint owners.
How do joint mortgages work?
If you’re planning on sharing a mortgage, then you’ll have two options on how you’d want to split the ownership. The decision you make will also have an effect on the liability of each homeowner.
A jointly owned property will fall into one of two categories:
- Joint tenants
- Tenants in common
Each named person on the mortgage is equally responsible for the overall repayment of the loan. Even if you continue to repay your share of the mortgage, but the other sharer doesn’t, you will still be pursued to make payment.
Any changes to your mortgage, such as a remortgage or changing from residential to buy to let would require each owner to consent. A joint mortgage is usually shared between two people, but it is possible to have three or four people sharing a mortgage.
Your solicitor who is representing you during your property purchase will ask you how you wish to split the ownership. They’ll also be on hand to explain the differences in greater detail.
If your mortgage is on a joint tenant basis, you’ll be seen as a single borrower by your lender. You’ll also have equal rights over the property. This arrangement is quite popular with married and long-term couples.
- The entire ownership is shared equally
- Any profits made from selling the property are shared equally
- If you remortgage the property, the new mortgage will also need to be in joint names
- Shared owners would inherit the share left behind from an owner who has died
- If you wanted to sell the property, each owner must consent
Tenants in common
Taking out your mortgage as tenants in common ensures that each borrower has their own share of the property. This is quite a common arrangement for friends or business partners that buy a property together.
- Shares in the property are legally split
- Shares can be split at a percentage of your agreed choice
- The percentage at which shares are split doesn’t need to be even
- You can leave shares in your home to someone of your choice in your will
- Shares in the property can be sold to another shareholder
- Your solicitor will create a deed of trust outlining the share of the property
Advantages of having a shared mortgage
Having more people to share a mortgage with has its financial advantages. The main advantage is that you may be able to take on a larger mortgage in comparison to having a mortgage on your own.
In addition, joint borrowers are often able to place down larger deposits that can secure better mortgage rates. This is because it’s a lot easier to save for a mortgage deposit when there are two of you.
Advantages of having a joint mortgage:
- Repaying a mortgage with other people can alleviate financial pressure
- Easier to save a larger deposit, giving access to the most competitive mortgage deals
- Combined income allows you to borrow more and go for more desirable properties
- Refurbishments and home improvements can be shared financially
- Can sometimes be more tax efficient (buy to let)
- One or more borrowers may have bad credit – read about joint mortgages with bad credit here
How much can we borrow on a joint mortgage?
As each lender varies on how they’ll assess joint mortgage applications, there isn’t one answer for everyone. The only thing lenders have in common is that they’ll assess the affordability of each person who’s applying for the mortgage. This is to establish how much you can borrow.
Lenders will typically lend up to four times your joint income, but this does depend on other circumstances such as your credit history. In addition, certain lenders may consider income such as tax credits or bonuses whereas other lenders won’t. There are lenders that may even lend up to five times your joint income.
Take a look at this example:
Lender A will only consider the income from your employment. Furthermore, they will only consider your salaried income, which doesn’t include bonuses or overtime.
Lender B will consider all of your total income.
If you went directly to Lender A, you could be selling yourself short and be offered a smaller loan amount which may not be enough for the property you wish to buy.
If you choose Lender B, they may offer you the maximum loan amount possible. This is because they’ve included all of your total income, including bonuses, investment income, and tax credits.
Mortgage advisors for joint applications
By speaking with a mortgage advisor, you can be sure that the best-suited lenders are approached based on your circumstances. You may not need a huge mortgage and your main priority is to keep your monthly repayments as low as possible. Whatever you aim to get from a mortgage, we’ll search the entire market for you and present you with multiple options.
Going to the wrong lender can cost you thousands in the long run. Sharing a mortgage with another person is not something to be taken lightly, so getting professional advice is highly recommended. You can make an enquiry below to get started.
About the author
Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.