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Compare Joint Mortgages
There’s nothing more exciting than buying a home together – but with that excitement comes a great deal of stress. Quotezone’s independent comparison tool will help find what works for you, taking the weight off your shoulders.
What is the main benefit of a joint mortgage?
Since at least two of you are seeking to buy a property together, the combined finances will mean you can put down a larger deposit, increasing the sum you can borrow. Also, the larger the deposit, the lower the mortgage rate, offering monthly savings.
How does a joint mortgage work?
Joint mortgages aren’t just for couples: they can be taken out by friends, family members or business partners. Though traditionally two people are involved, some lenders will allow up to four people to apply – with the two highest incomes considered.
When applying for a joint mortgage, the credit scores of those whose incomes are being considered will be taken into account. A high credit score from one individual can help if the other party’s is lower.
The participants are equally liable for the repayment of the mortgage, and this repayment is calculated like any other mortgage, over an agreed term.
What are the disadvantages of joint mortgages?
As each person named on the mortgage is equally liable for the repayments, if one person stops paying, the others will have to find the money to make up their deficit. Their credit ratings may also suffer.
Moreover, getting a joint mortgage with someone with a bad credit score could negatively impact your future credit score by association.
Can a joint mortgage be split?
Yes. Lenders understand circumstances may change – relationships may end and there are numerous steps in place to ensure an amicable and legal parting of ways.
One option is for one party to buy the other one out, then a Notice of Correction can be arranged to remove the other name from the mortgage.
Re-mortgaging may be needed if one person can’t afford to buy out the other’s share of the property – but they’ll need to demonstrate an ability to cover the monthly repayments.
A lender may allow for the transfer of the mortgage into just one name, but this will only be approved if the named individual is financially capable of covering the remaining mortgage. Re-mortgaging to a different lender can be a good option here.
Do both parties have to pay a joint mortgage each month?
No. Although each person is equally liable for the mortgage, the lender is only interested in the monthly payment being made. Equal contributions are not a requirement.