When considering taking out a mortgage with your partner or a family member, you may be wondering how joint mortgages work? A joint ownership mortgage is very common in the UK, but we understand that people are often concerned about the implications of this type of mortgage. Mortgage Assistants are here to help you every step of the way, and today we’re going to answer some of the most commonly asked questions about joint ownership mortgages.
What is a Joint Mortgage?
In comparison to a standard mortgage, a joint mortgage allows you to buy a property with other people. The mortgage will be in all of your names, and you are all responsible for making the repayments on the mortgage. Everyone shares this responsibility jointly, so even if one person misses a payment, you’ll feel the repercussions of this. However, you can decide how you share the equity of the property between you. The percentage will increase as the mortgage is paid off. There are no restrictions with regard to whom you can obtain a joint mortgage, and it’s a common option for partners, friends, or family members who want to purchase a property together. This option is also used by business partners who may be looking to invest in a residential or commercial property together.
Obtaining a Shared Mortgage for Unmarried Couples
When looking for mortgage advice in Stockport, our team often meet unmarried couples who are curious about the options available to them. In the UK, thousands of unmarried couples secure mortgages each week, and cohabiting unmarried couples are found throughout the country. Most of these couples opt for the choice of being joint tenants so that they both have equal ownership of the property. If one person in the couple was too passed away, then their partner would be able to inherit the property automatically.
However, there are many questions and concerns surrounding this area that an independent mortgage advisor in Stockport can help you with. It’s important to understand what will happen if you split up or if you have different incomes and want to contribute differently to the mortgage. These are things you should consider before entering into a joint mortgage together to ensure you are both clear about where you stand when it comes to mortgage repayments.
How Much Can We Borrow With a Joint Mortgage?
When taking out a joint mortgage, one of the biggest advantages is being able to draw upon both of your incomes to buy more expensive property. As long as you both have a regular income, you’ll likely be able to stretch your budget for a new home further and enjoy the benefits of purchasing a large or more expensive property. You’ll work with a mortgage lender to find out how much they will be able to lend you based on the two incomes combined.
They will also take into account your credit records and monthly expenses, so make sure you and your partner are both on the same page before starting mortgage discussions. We’ve seen many partners be surprised by the poor credit score of the other partner, so make sure you are upfront and honest about this if you suspect you will have issues securing a mortgage. It takes a lot of trusts to enter into a joint mortgage, so make sure you have a good chain of communication from day one to avoid any issues later on in the process.
How Much Will a Joint Mortgage Cost Us?
A joint mortgage will have the same fees that are associated with a standard mortgage. This includes the mortgage fees and the interest you’ll payback. When it comes to securing mortgages in Stockport, we always recommend trying to save as much as possible for your deposit. This will help to give you a great choice of mortgages and lower your interest rates. This is one of the top advantages of a joint mortgage, and it’s why many people wait until they are married or with a partner to purchase their first property. Of course, we encourage you to think about the risks of a joint mortgage, too, especially surrounding mortgages after divorce. While we hope this won’t happen, it’s something to be aware of as part of your future financial planning.
If you have someone else you are looking to invest in a property with, a joint mortgage is almost always the best way to go. Sharing the burden of the mortgage between two people takes some pressure of this investment, and you can work together to support each other throughout the application process. For more information about joint mortgages and whether you are eligible for this type of mortgage, don’t hesitate to contact our team today, who will be happy to discuss any questions you may have.