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Buying with friends: How joint mortgages work

For many, the prospect of sharing a home with friends and family can be a great option. Let’s delve into it a little more!

For first time buyers, getting a mortgage on your own isn’t easy. Luckily, there is a way – a joint mortgage. The truth is that getting a joint mortgage is more or less the same as any other conventional mortgage. The main difference is that instead of there being one name on the mortgage application there can be up to four! Sounds pretty easy to grasp, doesn’t it? Let’s have a further look into what else they involve.

Why should you go for a joint mortgage?

There are loads of benefits to getting a joint mortgage with either family or friends. The main one is simple. You’ll ultimately be able to get a far greater mortgage than if you were buying on your own. Basically, most lenders let you take out a mortgage which is roughly 4 to 5 times your annual income. The great thing about joint mortgages means that this will be taken from the collective income of those in the house. Meaning that you can borrow way more as a household than you would be able to on your own!

Are there any disadvantages?

With most house-buying schemes there are pros and cons. But, that doesn’t mean you can’t overcome any potential problems with careful planning. The main problems that come for those in joint mortgages appear when one of the homeowners fails to make a monthly mortgage repayment. This, in turn, can mean that the other homeowners may have to take the hit and make the payment.

Alternatively, if you want to move out and go somewhere else this is going to rely on the permission from the other owners. For example, if you wanted to sell your share they may have to find another person to buy your share or they buy it collectively between them. This can be very difficult and often an awkward process especially if you are living with friends. Even if you find a friend to take over from the one leaving, this person needs to be accessed by your lender to confirm they are suitable. You'll also incur lehgal costs as one person's name will need deleteing from land registry while another is added. But fear not, readers! Let’s see how we can overcome these problems.

How to deal with problems in a joint mortgage:

Although these problems might put you off getting a joint mortgage, don’t worry. Ultimately, they can be a great option for you going forward. And after all, there’s nothing that good planning and organisation can’t solve!

At Mortgages Online we recommend that if you’re seriously considering a joint mortgage, make sure you move in with a group of people that you can trust. Also, make sure that you lay out any potential problems and situations at the start of the house-buying process. What a lot of mortgage advisers recommend with joint mortgages is that you make a cohabitation agreement. This would also mean enlisting the services of a property solicitor as a means of making sure that your investment in the property is sufficiently protected. We also recommend that you keep a detailed record of your bills and maintenance costs so you can fairly divide this between you.

 

If you have any more questions then don’t be afraid to get in touch! At Mortgages Online we can offer great advice on joint mortgages by comparing a variety of mortgage lenders and the deals that they offer. So, contact us with any further questions to help your joint mortgage run smoothly!

For more information on mortgage rates, life insurance, types of mortgages and more, visit our Articles section. All of this, for free? We’re good to you. No need for any credit card info with MO, all of our services are completely fee free.

LauraWaller

Laura Waller

Laura Waller has been working in the mortgages industry since 2013, joining an independent brokerage in Essex. Laura has CeMAP 2 & 3 – Certificates in Mortgages Advice and Practice. Since then Laura oversees marketing for Mortgages Online, using her experience and expertise to write articles and blogs about mortgages and related topics.

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