Property inflation has outstripped wage increases over the years. Applicants nowadays, particularly First Time Buyers, are struggling to afford current property prices on their own so many people need to buy with someone else. This can make it easier to get accepted for a mortgage as you have two incomes for lenders to take into account when calculating your maximum mortgage amount.
This will benefit you, as you have someone to share costs with. However, it’s not as easy as you think, you can’t just move in with your partner, friend, or family member that easily. Here are some common questions that we get asked when it comes to applicants wanting to move into a property with someone else:
There are lenders out there that will allow up to four people to jointly co-own a property. Remember though, the more people that are co-owning a property, the more likely it is that one of them could back out. If one borrower stops their contributions to the mortgage payments, any joint owners have a legal right to remain inside the property unless a court rules otherwise. That’s why you need to be certain about who you are buying with.
You can also increase your mortgage at a later date if you want to, although, all borrowers will need to agree. This is why you need to think about your future and how long you are all planning to stay within the property.
As a Mortgage Broker in Hull, we commonly see that married couples or applicants in civil partnerships go for a joint tenancy. This means that if either applicant were to unfortunately pass away, the properties ownership would pass over to the other owner.
If there are plans to remortgage or sell the property in the future, both parties must consent to the idea before you can continue with anything.
Tenants in common is sometimes chosen if the applicants are relatives or friends that have bought together. You will both equally own the property but you are not forced to do so in shares. This situation normally comes about when one party is making a bigger financial input than the other. You can act individually if you are a tenant in common. For example, you can sell or give away your share of the property to someone else.
When you sign on for a joint mortgage, all borrowers are required to meet their mortgage payments. So, if one party decides to stop paying, the other/others will have to make up the shortfall to prevent the mortgage from falling into arrears. Arrears on a mortgage may stop you getting another mortgage in the future.
A good way to think of it is that you don’t own 50% of the property, you own 100% of it jointly.
Removing a name from a mortgage can prove difficult. Before allowing you to remove a name, lenders will need to be sure that you will be able to afford mortgage payments on your own. A mortgage is a huge financial commitment and making changes to it at a later date is not as easy as it sounds.
Even if you can show your lender that you have been able to keep up with your payments since your ex has moved out, it doesn’t guarantee that they will agree to your request to put the mortgage into your sole name. Having more people on a mortgage reduces the chances of arrears occurring as there are multiple incomes.
Lenders will also perform an affordability assessment before allowing anything, they will basically assess your personal and financial situation and see whether you will be able to maintain your payments. This is the same assessment that they carry out at the point of purchase.
If your request is declined by your lender, you should get in touch with a Mortgage Advisor in Hull as they may be able to help. A Mortgage Broker in Hull like us can see if there are any lenders that would allow your request. Sometimes getting Specialist Mortgage Advice could prove extremely beneficial, especially in complicated situations.
It may be worth talking to family members to see if they can help you out. They can do so by replacing your ex on your mortgage or by gifting you a lump sum to reduce the amount owed.
If you and your partner split up and you are the person to leave the property, you still remain responsible for meeting your mortgage payments even if you and your ex have agreed that they will make the payments.
Just like removing an ex’s name off a mortgage, it works the same for you removing yours. The lender will only allow you to remove your name if your ex can afford the payments on their own. They will perform an affordability assessment to check this.
If you are sending your partner money each month you should keep an eye on your own credit report to ensure they are paying the mortgage. If they default, it will impact your own score.
If you are still tied into the joint mortgage, when you plan on Moving Home into another property and need a new mortgage, your commitments will be taken into account. Unfortunately, that will mean lenders might not lend you as much as you would like.
Buying a property with anyone is always a risk as peoples circumstances change all the time. Go into the home buying world open-minded, if things change unexpectedly, there is normally a way to work around them. If you are struggling with your joint mortgage, it may be a good idea to speak get Mortgage Advice in Hull.