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Joint mortgages
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What is a joint mortgage?
It’s a type of mortgage that between two and four people can take out to buy and own a property together.
Usually, it’s a mortgage taken out with a partner or spouse. But you can also have a joint mortgage with a friend, parent, or other family member.
Joint mortgage holders share the responsibility for making the monthly mortgage repayments.
Joint holders can have an equal share in the property or differing percentages of ownership, usually according to how much each person has invested into it.
It’s important that you define your rights and responsibilities with a joint mortgage and look into how you can protect your interests.
Is it better to have a joint mortgage?
It depends on your circumstances. You’ll need to take a few things into account before applying for a joint mortgage.
Pros
- Pooling savings with another person for a bigger mortgage deposit means you’ll need to borrow less and will have lower monthly repayments, or you may be able to afford a larger home in a desirable location
- Lenders take into account both of your incomes on a joint mortgage application. This should boost your borrowing potential, so you’ll be able to afford a larger mortgage than if you took one out on your own
- A joint mortgage might be the only way you could afford to get on the property ladder
Cons
- If one of the joint mortgage applicants has a poor credit score, your application could be rejected. This will have an impact on your own credit rating, too
- You need to be confident a joint applicant is trustworthy and reliable. If they stop putting money towards the mortgage payments, then it’s up to you to cover the whole amount
Who can take out a joint mortgage?
Both married and unmarried couples can have a joint mortgage.
In addition, sometimes friends or family members might take out a joint mortgage to split the costs of living together.
You don’t all need to be living together to have a joint mortgage either – for instance, a parent might help their child buy a home by becoming a joint mortgage holder, even when they don’t intend to live in the property.
However, some lenders will require all borrowers to live at the property, so you might need to speak to a mortgage adviser to find products that are suitable for your situation. Some advisers charge a fee, but fee-free advice is available.[1]
Another common scenario is for several people to take out a joint buy-to-let mortgage, as a business partnership.
Legal agreements: Joints tenants vs tenants in common
Whether you enter into a joint mortgage as a couple, a group of friends, or as part of a business venture, you should make sure you have legal agreements in place that protect everyone’s interests fairly.
You can jointly own property as either joint tenants or tenants in common and these two types of ownership define what happens with the property if your relationship breaks down, or someone dies.
Joint tenants
As joint tenants, each owner named on the deed has an equal right to the property. If one owner dies, the property automatically passes on to the other owner or owners. This is known as the right of survivorship, and it means you can’t pass on the property in your will.
This option is most common for couples who want equal ownership of a property.
Tenants in common
If you opt to be tenants in common, each homeowner owns a different percentage share of the property.
This is useful when buyers contribute different amounts at the outset or contribute unequal amounts to the mortgage each month.
In the event of one of the property owners dying, their share doesn’t automatically pass on to the other owner or owners. Instead, the share will form part of the deceased’s estate.
If a tenant in common wants their share to pass to the other owner or owners, they should specify this in their will.
Couples usually choose a joint tenancy, but there’s no reason why they can’t opt for a tenancy in common instead. They might do this, for example, so that their share passes to children from a previous marriage if they should die, rather than to their partner or spouse.
If you choose to be tenants in common, you’ll usually need a declaration of trust drawn up.
A declaration of trust is a legally binding document that outlines who owns what, what each party has contributed and how the property will be divided in the event of a separation, sale or death.
Joint tenants can also have a declaration of trust drawn up to control how the joint tenancy can be severed.
Without one, anyone under a joint tenancy can independently sever it at any time, so that the property is then held as tenants in common and the tenant can then leave their share to whoever they wish.
A joint mortgage with tenants in common is more usual when you’re buying a property with friends or family.
Cohabitation agreement
Co-owners of property can also ask their solicitors to draft a cohabitation agreement. This covers who is responsible for things like bills, living expenses, home maintenance and possessions such as furniture.
How much can you borrow with a joint mortgage?
In most cases, lenders will allow you to borrow four times your combined salaries - though some will go higher than this.
How to compare quotes for a joint mortgage.
To compare quotes for a joint mortgage, we’ll need to know a few things, including an estimate of the property value, how much deposit you’ve saved up and how long you want the mortgage to run for.
Leaving a joint mortgage
Circumstances can change and there could be instances when one party wants to leave a joint mortgage, or a partner passes away.
If the person you have a joint mortgage with dies and you were joint tenants, then as the surviving partner, you inherit their share of the property. If there’s no life policy in place to cover the mortgage debt, then you’ll be responsible for the remaining mortgage repayments.
You may need to remortgage or sell the home if you can’t afford the repayments on your own.
If you split up with your spouse or partner, then there are a few options.
You could sell the property and divide the proceeds.
Or, if you can afford the repayments on your own, you could choose to stay in the property and buy out your partner. You’ll need to contact your lender and they’ll want to do an affordability check to be sure your income is adequate to keep up with the repayments.
If someone wants to leave a joint mortgage where you have a tenancy in common and can’t agree on how the house value should be divided, you may have to go to court, which can be extremely costly.
If the remaining mortgage holder/s intend to stay in the property, a remortgage may be necessary to cover the cost of the outgoing borrower’s share of the mortgage.
Valuation
If it’s decided that the person leaving the mortgage should have a share of the equity built up in the property since it was purchased, a valuation will probably be necessary.
This could go either way - if the property value has fallen, they may have to leave with less than they put into the property.
Solicitors
You’ll usually have to engage a solicitor to handle the removal of the leaving party from the mortgage and from the property deeds. If you have a declaration of trust, it may need to be redrafted to omit the leaver.
Mortgage
Be aware that your mortgage lender is likely to charge for any amendment to the people named on the mortgage and deed. The remaining holders may also need to have their affordability checked again to make sure they can still afford the mortgage with fewer people contributing.
Frequently asked questions
Most lenders allow a maximum of four buyers to take up a mortgage together because they require each person to be named on the property deeds. As a property deed only has space for four names, this is likely to be the maximum number who can take out a joint mortgage.
One reason people may choose a joint mortgage is to increase the amount a lender is likely to offer them. But bear in mind that, even though some lenders will allow four people to take out a mortgage together, most will only take the earnings of two of them into account when calculating affordability.
Many lenders only allow a maximum of two people on a joint mortgage, so do check on that before comparing deals.
It can be harder to find a lender if not all of the mortgagors plan to reside at the purchased property; for example, if a parent agrees to be named on a joint mortgage to help out with their child's affordability.
Some lenders may allow parents to go joint on a mortgage even if they won't be a resident in the property, but this can have implications. Read our guide on how parents can help their children buy a home for more information.
Yes, use our mortgage calculator, but just ensure you tick the ‘two’ button when you’re asked how many people are applying for the mortgage.
Most lenders allow joint mortgages for a child and parent. But there’ll be some conditions.
The parent will usually need to be in employment and there may be an upper age limit. For example, the parent might have to be no older than 80 years old when the mortgage term ends. That would mean, if you wanted to take out a mortgage with a parent aged 55 and the lender has an age limit of 75, then you’d need to choose a mortgage term for a maximum of 20 years
This is a type of joint mortgage that you take out with a close relative or friend - most commonly with a parent.
Their income will be taken into account on the mortgage application, and they’ll take joint responsibility for the debt and repayments. But their names will not be on the deeds, and they’ll have no claim over the property, you’ll own it
It can be a great way to get onto the property ladder. And if you get a salary increase, for example, and can afford the mortgage independently, then the joint borrower can be taken off the mortgage.
However, not all lenders offer this type of mortgage.
Just as when you open a joint bank account, taking out a joint mortgage with someone else will create a financial link to them on your credit record.
This means that when lenders check your credit score in the future, they may take into consideration the credit records of people you’re financially linked to, as well as your own.
If you’re financially linked to someone with a credit record that’s better than yours, this can have a positive impact for you. But if the person or people you’re financially linked to default or miss payments on their own credit products, this could adversely affect your own ability to access credit.
Because of this, joint mortgages are only for people who trust each other with financial management and decisions.
Yes, you can take out a joint mortgage where only one person on the application is bringing in an income.
The lender will take into account what the person with the salary can afford to repay every month when deciding how much money you can borrow.
In most cases the difference is that, with a joint mortgage, all parties will own a share of the property and be responsible for repayments.
With a joint borrower sole proprietor mortgage, the joint borrower will also take responsibility for the debt and repayments, but their names will not be on the deeds. The sole proprietor owns the property by themselves.
Before entering into a joint mortgage agreement, it’s crucial that you understand the differences between this and joint ownership. If you take out a mortgage alongside other people, you all share responsibility for paying the mortgage. If one of the mortgagors fails to pay, the others will still be responsible for the debt.
To be a joint owner of the property in law, your names must be on the deeds.
In reality, joint mortgage holders are usually also joint homeowners as most lenders will insist that the names of all mortgagors appear on the deeds, but you should always check that this is the case.
Things become more complicated if you want to be co-owners, but the mortgage is only in one person’s name.
This might happen if one person pays a 50% deposit and the other takes a mortgage for the remaining 50%. If this situation applies to you, it’s important to ensure you have the right legal agreements in place to protect your interests.
More mortgage topics
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
PLEASE NOTE: THE FCA DOES NOT REGULATE MOST BUY TO LET MORTGAGES
[1]For online mortgage comparison and advice Gocompare.com introduces customers to Koodoo which is the trading name of Mortgage Power Limited who are authorised and regulated by the Financial Conduct Authority (FRN 845978). Gocompare.com’s relationship with Koodoo is limited to that of a business partnership, no common ownership or control exists between us. Please note, we cannot be held responsible for the content of external websites and by using the links stated to access these separate websites you will be subject to the terms of use applying to those sites.