Joint mortgages ar a great way to get on the property ladder and buy a bigger & better home by pulling the financial resources of two or more people( usually up to 4).
Every co-buyer will have their name on the mortgage and be jointly responsible for the mortgage.This means the lender can come after all or one of you if any mortgage repayments are missed. The equity can be distributed in line with contribution by having a pre-purchase agreement and declaration of trust in place.
Joint mortgages are a great option as they drastically reduce the individual time to the property ladder for many and increase their mortgage affordability as a collective.
You should watch out to ensure your fellow co-buyers have a suitable credit score, salary and savings( if they intend to contribute to the mortgage deposit as well).
A plan should also be drafted in the prepurchase and declaration of trust highlighting how this relationship will end and how you will all be able to sell your equity in the property.
Joint mortgages work just like typical mortgages, the costs are the same but the internal structure between the co-buyers is what's different. There is no change in the application process but the lender will assess each co-buyer individually to get a collective view of the groups mortgage affordability.
So how do Joint mortgages work?
You can decide to be joint tenants or tenants in common when you get a joint mortgage.
Joint tenancy means you both own equal parts of the property and need each others consent to sell or do anything to the property.
Tenancy in common means you have a pre-purchase or & declaration of trust which allows you to own unequal parts of the property and gives you the right to sell your share in the property at your own will.
Joint mortgages will also show on your credit file and the financial association to the person will be a big indicator. If this person goes on to carry out any fraudulent behaviour or misses payments on the joint mortgage or other credit obligations this may negatively impact you. This is why you should ensure you have a fairly good idea of who your co-buyer is and have some infrastructure in place to avoid missed mortgage repayments.
If you are looking for a co-buyer then there are a few things you will like to know ofcourse to decide if they fit you. You can start your co-buyer search on our Homebae network and meet any matches at our Homebae meetups.