Joint Mortgage Applications

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Joint Mortgage Applications

What is a joint mortgage and what does being joint tenants or tenants in common mean? 

A joint mortgage is typically a mortgage in two people’s names. You can actually take a mortgage out in more than two people’s names, but two is the norm. 

Being joint tenants or tenants in common is something a solicitor will confirm with a purchaser of a property. It’s how the legal ownership of the property is arranged. Typically, as a couple, choosing joint tenants gives you equal rights to the whole property, and property ownership automatically goes to the surviving owner on death. 

You can’t pass your ownership of the property on to somebody else in your will, it automatically goes to that joint person. You both own all the house. 

Tenants in common is more typically used where friends or siblings buy a property together and each maintains their own distinct share of the property. They could actually own different shares of the property, like 60-40 or 70-30 for example. 

The property then doesn’t automatically go to the surviving owner on death. The person who’s died can give that share of the property to their family or anyone else they want in their will.

Some couples prefer tenants in common. It might be that one of the purchasers has had a gift from their family to buy the property, and they might not want that to go to their partner when they die. They might want it to go back to their family. 

First Time Buyers, particularly, will tie themselves in knots about which one to go for. But when we talk about their circumstances, it will usually be quite obvious which one they should go with. The solicitor will always give advice about that.

What is a joint borrower sole proprietor mortgage?

It’s often known as a JBSP and sometimes just ‘borrower non-proprietor’ because it’s not necessarily a joint mortgage. Again, you might have more than two borrowers. 

I’ve actually recently done one of these for a young couple. One of them’s earning, and the other has just started a self-employed business, so they don’t have usable income to support the mortgage. But somebody else can help: they have earnings and surplus income that can be brought into the calculation. The lender is happy to lend the amount required for that couple to buy their new home. 

Typically, with a joint borrower sole proprietor mortgage, the couple are the property owners, and the person coming in as the helper is named on the mortgage. They have the same legal responsibilities for the debt as the property owners, but they will not actually be an owner themselves. 

Lenders may do that for more than two people, for one individual or a couple, where maybe a parent or family member is helping. Not all lenders do this, but plenty do. There are even lenders if that helper is not a family member. 

It’s a growing area of the market because of affordability issues around stress interest rates lenders use. People are looking at ways for a family member to help with that affordability. It’s a way of typically getting somebody into their first home.

A mortgage broker will help you explore those options, because it’s not typically done by the high street banks – but there are plenty of lenders who will do it.

How does a joint mortgage work?

If a mortgage is in more than one name, each borrower has the same liability. With tenants in common, you own just part of that property, effectively. On a mortgage, you are responsible for the whole debt. It’s called joint and several liability – and without being too technical, it means that everybody on a mortgage owes all the money. 

The lender can go to any one of those borrowers to get all of the money if there’s a problem. It’s not something to be scared of, that’s just basically the way it works. A joint mortgage is just a mortgage in more than one name. 

Where one person has a mortgage, they’re responsible for the whole debt. Where two people are on a mortgage, they’re both responsible for the whole debt.

Who can take out a joint mortgage?

Effectively, it’s to do with age, residency, earnings and credit history. Typically, you’ve got to be over 18. Some lenders ask for at least one applicant to be over 21. Many lenders don’t have a maximum age, but some do. 

Some will say if your income is being used to support the mortgage, it’s got to be repaid by the time you retire. They’ll look at when you’re going to retire, and they’ll have a common-sense test on that. 

Even if you’re not earning, you can still be on the mortgage. If you’re not a UK resident, some lenders will allow it. You could be a recent arrival in the UK, but depending on your circumstances, your work situation, your earnings, the type of visa you’re on and whether you’ve got indefinite leave to remain, there are plenty of lenders out there who will look at the circumstances and help you.

Can I get a joint mortgage with a guarantor? 

There are lots of lenders who used to do guarantor mortgages who don’t anymore. Some who used to do guarantor products now do joint borrower sole proprietor, while some still do guarantor mortgages. 

Without getting too technical, a guarantor mortgage is where someone can support a mortgage with their income, but they’re not responsible and not named on the mortgage deed.  It’s a good way for someone to come in and contribute their income to support the borrowing – they won’t have any ownership of the property. 

A mortgage broker will work out for you which route is the most sensible one to go down and which lender’s criteria will suit you. 

Can I get a joint mortgage with friends or family?

Absolutely. In the circumstances I described where a young couple bought a property with somebody else – that person is not related to them. It’s a close family friend who’s coming in on that borrower sole proprietor to help out.  They equally could come in as a guarantor. 

Many times, clients will know the destination, but not the route. They might have an idea of how to get to their destination of property ownership, and they’ll have heard snippets about joint borrowers, guarantors and things. 

It’s our job to get under the skin of what’s going on in those client circumstances so we can work out which lenders are going to have the right solution for them. These mortgages can be more complex to set up, but often it’s very straightforward.

How much can joint applicants borrow for a mortgage?

It’s down to affordability calculations. Lenders will look at gross income, take home pay, what you will need to spend to run your home, plus any debts you have. That calculation will be run according to whether you’re sole or joint applicants.  

Joint applicants can typically borrow more – because if you’ve got two people paying one gas bill and one council tax bill that’s generally better than one person having to pay it all.

That’s the point of bringing in a joint borrower to contribute their earnings. Lenders then look at your income and apply a multiple to see how much they can lend. They’ll use that as a guide and also do an affordability calculation. 

It’s another reason to speak to your mortgage broker – we can do the calculations for you and give you a really good guide to what’s possible, so you can start making plans.

Is a joint mortgage always split 50-50?

It really goes back to what we said about joint tenants and tenants in common. With tenants in common, you can own different shares of the property. So the answer is no; it’s not always 50-50. You can decide a different share through tenants in common.

Who gets the house with a joint mortgage if someone dies?

That’s where it’s really important to make sure your mortgage is protected, so that you can cover your mortgage payments if you can’t work due to illness, and have your mortgage paid off if you die. 

It’s also important to understand, whether you’ve gone through joint tenants or tenants in common, who’s going to get the house if you die? Will someone continue to live in the house, or would you want someone in your family to inherit your property? 

If you’ve got life insurance in place to pay the mortgage off if you die, it’s a good idea to put that in trust, so that money goes to the right people at the right time. It’s also really important to have a will so you can clearly state your intentions on who will inherit if the unthinkable happens. 

Looking at a less drastic scenario, who gets the house in a joint mortgage if people decide to sell? That’s all down to how you set it up in the first place. If you’re joint tenants, you can decide to go your separate ways and take separate shares of the property. 

The biggest issue when people have a relationship breakdown and want to sell a property, is about being able to agree. This is why it’s so important to have a proper conversation with whoever’s organising your mortgage about protecting yourself if something goes wrong.

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What is the maximum age for a joint mortgage? 

Many lenders now don’t have a maximum age. Some will say that a mortgage has to be done by the time you retire, some may have an age of 75 as a guide, and some may say 80. 

But the days of mortgages having to be repaid by the time when everyone retires at 65 are long gone. The advice is generally to aim to be mortgage free before retirement, but there are circumstances where it can make sense to go beyond that, and there are lenders that will accommodate it. 

We would look at the circumstances of the client and if it makes sense for them, we’ll find the most appropriate lenders to accommodate that. 

What happens if you have a joint mortgage and the other person dies?

The question to the client is, what would you like to happen? We will explore what situation they want to be in  – what does good look like for them? Then we structure the mortgage and any protection arrangements around those objectives. 

We want to make sure that if the unexpected happens, people aren’t left homeless or left with debt. You would have enough to worry about if that happens, so don’t let money be one of those worries.

How do you calculate a joint mortgage? 

Generally you can borrow your total joint income, multiplied by the lender’s income multiple. 

When we’re doing an affordability calculation, there might be two incomes to put in and only one set of outgoings for the property. Or, each individual person has their own outgoings. Often with First Time Buyers, they’ve got student loans; credit card payment or car finance. All those things are taken into account to then arrive at the total amount the applicants can borrow. 

Those calculations vary from lender to lender. Without getting too technical, they use numbers from the Office for National Statistics. The ONS publishes data for the average person’s spending on gas, electricity, groceries etc, and some lenders will just use those figures to do a very quick straightforward affordability calculation. 

Others will look at your bank statements and go through how you spend on different things. A broker will know which lender is going to work best for each customer depending on their outgoings. If somebody’s got very low outgoings, using the ONS data might not work. We can work it out for you. 

Another thing that can impact on how much you can borrow is the percentage deposit you can put down. Some lenders will lend more if you’re putting in a bigger deposit. Others may do a set amount of borrowing regardless of the deposit, as long as you’ve got the minimum. 

Can you get a joint mortgage when one person has bad credit?

This is another ‘it depends’ answer. It depends on what we mean by bad credit. With lenders, most lenders will allow a little bit of a slip-up. Often people will have missed a payment inadvertently on a credit card, or something might have gone wrong with the changeover of a mobile phone contract or utility provider. That’s quite common. 

There’s a difference between that and somebody who has had a genuine debt problem. Sometimes people can’t keep payments because of a change in family circumstances; illness, work problems… there are so many different reasons these things can happen, and there are lenders out there who will accommodate that. 

I often speak to people who think they can’t get a mortgage because they have bad credit. The first step is to look at the credit report and discuss it with the client. We work out what happened and what was going on at the time. 

Different lenders will accommodate different things, and we will see which category that client will fit into. Most lenders who do Adverse Credit lending have different tiers of more and less serious credit issues, where their underwriting and rates vary according to the tier. 

We work out which tier each client will be in with different lenders and if indeed it is necessary to go to an adverse credit lender. It’s very rare that we have to say no outright. More often, we say, “we can’t do this, but we can do this.”

Often people are put off  – they’ve been told by someone they won’t get a mortgage, but often it’s not the case. Don’t assume things are impossible. Sit down with a mortgage broker and have that conversation.

Do lenders offer better rates for joint mortgages?

No. The rate offered isn’t determined by how many borrowers are on the mortgage. Some lenders, though, will do specific rates for borrower non-proprietor mortgages, and sometimes they can actually be better than other rates. 

Again, it’s a case of looking at what’s available, and picking the most positive rates on the day. We find the best combination of criteria, speed, rate and cost. 

There will always be one lender shouting about how great their rates are – but we can see that while it’s better than last week, other lenders are still offering a better deal. That’s the beauty of being a mortgage broker; we can pick and choose.

Can you get a joint Buy to Let mortgage?

Absolutely. You might have a situation where somebody owns a Buy to Let property in joint names and wants a joint mortgage, or it might be owned by one person and they want to put the mortgage in joint names. You can do that. 

It’s also possible to do joint borrower sole proprietor on Buy to Let – but it’s not usually necessary, because affordability is determined by that property’s rental value rather than the income of the applicant. 

So if you’ve got a property that you own jointly that you want to remortgage, or you’ve got a jointly owned property you’ve been living in and you now need to let it out, absolutely, you can get a joint Buy to Let mortgage.

How does remortgaging a joint mortgage work?

It’s straightforward. It’s the same process as for a sole name mortgage and it’s very similar to applying for a joint mortgage in the first place.

Remortgaging is moving from one lender to another, typically to get a better deal, to borrow more money, restructure things or change the term. It’s very straightforward and no more difficult or complicated than a mortgage in one person’s name.

Can you transfer a joint mortgage to one person?

Yes, absolutely. Just going back to borrower non-proprietor mortgages, typically you might have two or more people on that mortgage and not all of them are property owners. You’d be doing it with the anticipation that at some point in the future that mortgage is going to be changed into just the names of the property owners. 

Whether you’re going from joint to sole, or three to two, or even four to one, there are different ways to do that. If you’re changing the ownership of the property at the same time, it’s called a transfer of title or transfer of equity. 

But if you’re just removing a borrower who isn’t a property owner, that’s a very straightforward process. 

What happens if you have a joint mortgage and then you split up?

If you’ve got a joint mortgage and you’re a couple, you’ll typically have taken it out as joint tenants. You’ve got equal rights to the ownership of the property. In this case it’s a question of agreeing who gets what share. 

Often people will be able to agree on that, based on how much deposit each put in and working out percentages to allow for any change in the property value. 

Difficulties arise if the parties can’t agree. Things take longer and it’s more complicated if there isn’t that agreement. But if you have a joint mortgage and joint ownership as tenants in common, you’ve already agreed your shares in the property. It’s straightforward.

Again, mortgage brokers are there to help in those circumstances and talk through the different options. I’ve had very positive experiences with clients who’ve been splitting up. They’ve seen me together, explained what’s happening, and want to understand what each of them individually can do if they go their separate ways. Can they buy property on their own? How will it work? 

I’ve done that for people many times. I’ve also done it speaking to each partner, individually, but it works better if people can agree.

What are the advantages and disadvantages of having a joint mortgage?

The clear advantage is that you’ve got more income to help affordability. Whether that’s buying a property with a friend, a partner, having a family member help through borrower non-proprietor or through a guarantor, having a joint mortgage means typically more income for affordability. 

Also, if you’re married or in a civil partnership, it gives you more protection to be on the mortgage and joint property owners. I often speak to couples who’ve been together for years who want to buy a house in one name. There can be good reasons to do that, but it usually makes sense to have a joint mortgage if you can. 

The disadvantages come in if things go wrong and you need to go separate ways. You are both responsible for the whole debt, so you can’t just run away if things go wrong. You’re responsible for that debt. 

A mortgage can only be transferred into one person’s name if the lender determines it is affordable to that person. A joint mortgage is a long-term commitment, which people do usually realise.

Are there any alternatives to a joint mortgage?

The main alternative is to do it on your own. You can also look at the guarantor option and borrower non-proprietor option, which are different ways of structuring ownership of a property.

How do you apply for a joint mortgage? 

Speak to a mortgage broker; we will be very happy to have a conversation with you – we’ll have a no obligation, no cost initial chat. We’ll explore what you can do and see what’s available. 

We will typically put an hour aside for that chat with a client. Sometimes it takes a bit longer; often we can cover everything off in less time than that. We will always be guided by the client’s questions and how much they need to know. 

As we’ve seen from this podcast, people have lots and lots of questions. There’s jargon to wade through, different ways of looking at things, and so having that initial conversation with a mortgage broker can be really instructive to find out what direction of travel you need to be going in and what your options are.

Your home may be repossessed if you do not keep up with your mortgage repayments. 

The information contained within was correct at the time of publication but is subject to change. Podcast recorded in October 2023. Article approved by Primis Mortgage Network 03 November 2023.