Joint Mortgages

Joint Mortgages

Compare Joint Mortgage Deals

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There are no tables for this criteria

There are no tables for this criteria

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There are no tables for this criteria

There are no tables for this criteria

There are no tables for this criteria

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There are no tables for this criteria

It is very important that when considering a mortgage you work out how much you can afford. While there is a greater onus on mortgage lenders to lend responsibly you will also need to consider what level of borrowing is appropriate for your circumstances.

In simple terms lenders will base how much you can borrow on a multiple of your income (joint income for couples). However there are a number of factors that will determine what you can borrow from a mortgage company.

Since April 2014 UK mortgage lenders are required to apply strict rules to what they can lend to you based on your personal circumstances. In assessing affordability lenders will not only look at your income but also your outgoings e.g. monthly household bills. Lenders will look at your bank statements typically over the last 3 months to determine whether you can afford the mortgage you are looking for.

Many mortgage deals have initial periods where preferential terms are offered and borrowing costs are lower than normal – when this discounted period ends make sure you can afford any reasonable increase that may kick in. In assessing affordability lenders will take into account your income and outgoings and your current employment history. In calculating disposable income your total income will be taken into account less other debts you may have and living expenses. The lender considering your mortgage application will have their own method of assessing affordability but it makes sense to do your own budgeting calculations to ensure the monthly repayment requirement is well within your budget.

In calculating how much you can borrow the lender will apply a maximum amount you can borrow called the loan to value of the property (LTV). E.g. If you are a first time buyer the lender may stipulate a LTV of 95% which means they are prepared to lend up to 95% of the value of the property (this will be assessed by the mortgage company’s own appointed surveyor). In this scenario the first time buyer would be required to put down at least 5% towards the property purchase. The mortgage rate deals offered by a lender will be affected by the level of deposit that can be put down.

Generally speaking the higher the deposit that can be put down the better the mortgage rate can be achieved.

Buying a property can be an expensive exercise and it is important that you are aware of all the costs that come into play when buying your home.

The costs relating to your mortgage will be set out clearly by the lender in what is known as the “Keyfacts” document provided to you.

These costs may include:

  • Arrangement Fee – Charged by the lender to cover the administration costs of processing your mortgage. This will vary from deal to deal. You normally have the option of adding this fee to your mortgage but this will increase your cost of borrowing over the mortgage term.
  • Mortgage broker Fee – If you have used a mortgage broker to help arrange your mortgage for you then a fee may be charged which will be outlined in your keyfacts document.
  • Mortgage Account Fee – Applied by the lender at outset when you first take out your mortgage to cover the set up and termination costs of your mortgage.
  • Valuation Fee – Charged by the lender to value your property in assessing the value for mortgage purposes.
  • Re-inspection fees – If a lender has required you to make agreed repairs to the property a re-inspection may be required
  • Higher lending charge – If you are borrowing a high loan to value the lender may decide they wish to insure the possibility that you may need to sell your home and this results in a loss.
  • Early redemption charges – If you pay off part or all of your mortgage earlier than expected the lender may charge you a fee – this will be covered in your keyfacts document.
  • Mortgage exit fee – Paid to your lender when you repay your mortgage.
  • Insurance costs – as part of your mortgage you may be encouraged to take out insurance either by a broker or the lender to cover buildings insurance and other optional insurance such as mortgage life insurance.

1. If you are unsure of your mortgage options seek mortgage advice from a FCA regulated independent mortgage broker

2. Maximise the deposit you can put down on your property to benefit from the most competitive Mortgage interest deals.

3. Read the Lender Mortgage key facts document carefully to understand the costs being applied by the lender.

4. Ensure that you are comfortable that mortgage repayments (whether repayment or interest only) fall within your budget.

5. Remember that mortgage discounts are temporary and borrowing rates may go up when the discount period ends.

6. If you are remortgaging ask your current lender what deal they can offer you as well as shopping around.

7. If you lender’s valuation of your property is too low ask them to reconsider and provide supporting evidence from the sale price of other properties in your area.

8. For interest only mortgages ensure that you plan carefully how to pay off your mortgage and check at regular intervals that your repayment strategy is on track.

9. At the time of writing interest rates are at record lows. While borrowing is cheap now this situation may change so factor in a rise in interest rates into your budgeting calculations.

10. Consider mortgage unemployment insurance in the event that you lose your job. This may provide useful breathing space in covering mortgage repayments while you look for a new job.

If you are looking to get started on your way up the property ladder, combining your income with that of a partner of friend could be one way to get a higher value mortgage. Find the latest joint mortgage offers and compare deals to find the mortgage that is right for you.

What is a joint mortgage and how does it work?

A joint mortgage is very similar to a regular mortgage, except that it’s taken out in the names of two or more people, rather than in the name of a sole borrower.

Whether you’re planning to buy a house with your partner, or with a friend or group of friends, it’s important to decide what type of legal ownership structure is best for you. You can either opt to become joint tenants or tenants in common – the key differences between the two types of joint tenancy are as follows:

Mortgage with Joint tenancy

Joint tenancy means that each of you owns half the property – if there are more than two of you, you will each own an equal share of the mortgage.

Legally speaking, you are considered to be a single owner and therefore joint tenancy is usually chosen by people in relationships, such as those who are cohabiting, married or in a civil partnership.

If one of you dies, the property (and therefore any mortgage debt that still needs to be paid off) will automatically pass to the remaining owner. Because of this it can be a good idea to take out insurance to ensure that the mortgage will be paid off in the event of one partner dying.

Mortgage with Tenancy in common

Unlike a joint tenancy, owners under tenancy in common are not considered to be one single owner – this makes them the more common joint mortgage option for buyers who are not in a relationship, such as group of friends buying together.

Like a joint tenancy, this means that you each own a share of the property and, if one of you dies, any mortgage debt that is left to pay will pass to the remaining tenants. However, if one of you dies, the property will not automatically pass to the surviving owner or owners. Instead, the property will be bequeathed on based on the details of your will.

Another key difference from a joint tenancy is that a tenancy in common means that you can each own a different share of the property, rather than an automatic half-and-half division of ownership.

Things to consider when taking out a joint mortgage

A joint mortgage of any sort is a major legal and financial commitment. Things to consider before you decide to make the leap include:

  • You may need to draw up a cohabitation agreement if you are not married or in a civil partnership. This is an agreement which formally set out the financial arrangements and obligations of your joint mortgage.
  • All named owners are equally responsible for making the full monthly mortgage repayment and if one of you falls behind, the remaining owners will be chased for the late payment and their credit ratings can be adversely affected.
  • If you buy a property with a partner, bear in mind that you will both be equally liable for meeting repayments if you separate.