Joint mortgages explained
What is a joint mortgage?
A joint mortgage could be suitable for you if you want to buy a property jointly with at least one other person. Some lenders will allow up to four people to share a joint mortgage.
Each owner will be named on the property deeds and will be jointly responsible for making the mortgage repayments.
It’s therefore vital that you trust the person (or people) you’re applying for a joint mortgage with.
Expert advice on joint mortgages
Which? Mortgage Advisers are experts in arranging joint mortgages. Call us today on 0800 316 4071 or fill out a callback form and we’ll call you back.
How does joint property ownership work?
There two ways you can own a property if you’ve taken out a joint mortgage. But it’s crucial to remember that everyone on a joint mortgage has responsibility for meeting monthly mortgage repayments.
This allows you to split the ownership of the property into whatever share you like. You could, for example, have a 60% share, while the other owner has a 40% share.
Tenancy in common also allows you to sell your share of the property separately, and leave your share to someone other than the other property owner in your will.
In a joint tenancy, you jointly own the entire property with the other buyer. If one of you dies, your part of the property is passed onto the other owner.
You can find out more in Which?’s expert guide to tenants in common vs joint tenancy.
Who can get a joint mortgage?
You need to think carefully before you enter into an arrangement to buy a property with someone else. You’re creating a financial link between two or more of you, and together borrowing potentially hundreds of thousands of pounds.
There are no restrictions on who you can get a joint mortgage with. It could be a partner or spouse, friends, siblings or parents, or even business partners.
How much can you borrow with a joint mortgage?
One of the big advantages of a joint mortgage is that you’ll usually be able to borrow more by sharing a joint mortgage than by applying for a mortgage on your own.
This is because lenders will consider the combined income of each applicant when assessing how much mortgage you can afford.
As a rule of thumb, a lender will typically lend you up to 4.5 times your annual income. Say you earned £40,000, this means a potential mortgage of £180,000.
But if you add another applicant, whose annual income is also £40,000, this could double the amount you can borrow to £360,000.
Find out how much you and a second applicant might be able to borrow using our mortgage borrowing calculator.
Are joint mortgages different to standard mortgages?
Joint mortgages typically come with similar rates and fees as standard mortgages.
But with more than one person on the mortgage, you can combine your savings to pay a larger deposit and this will often enable you to access better mortgage rates.
Mortgage rates get cheaper as your deposit gets bigger. The best rates are typically available for those with a 40% deposit and get more expensive in 5% increments.
So, a 75% ‘loan-to-value’ mortgage (the proportion of the property you’re taking a loan to cover), will be cheaper than an 80% loan-to-value mortgage.
For first-time buyers, using joint savings to move you from a 95% loan-to-value mortgage to a 90% loan-to-value mortgage could get you a much cheaper rate and save you thousands on your mortgage repayments.
Estimate how much your repayments might be with our mortgage repayment calculator.
Joint mortgages: what to watch out for
You will be financially associated with everyone you get a joint mortgage with, which could prove problematic if a co-owner falls into financial difficulty.
If a co-owner stops making their share of their mortgage repayments, you’ll still be liable for them. Your financial association with them will also affect your future credit applications.
You also need to consider what would happen if one of you wanted to move out/sell their share and the other didn’t – plus agree on how renovations, repairs, utility bills and other payments will be split between you.
Should I get a joint mortgage with my parents?
Parents can often increase their children’s creditworthiness in the eyes of lenders by applying for a joint mortgage with them.
This makes both parent and child the co-owners of the property and is not a decision to be taken lightly. We’d only recommend this to parents who can comfortably afford this additional financial responsibility.
You must also be willing to treat your children as equals when making decisions about the property.
This could create additional costs. If you already own a property, you’ll be subject to the additional stamp duty charge of 3% when buying the new property.
Our buy-to-let stamp duty calculator will show you the cost of buying this way.
You may also have a capital gains tax bill to pay when you sell. Find out more in Which?’s guide to capital gains tax on property.
Impartial, expert joint mortgage advice
Speak with one of our expert mortgage advisers, who can recommend the best joint mortgage options for your personal circumstances. For a free consultation, call 0800 316 4071 or fill out the callback form and we’ll call you back.