What is a joint mortgage?
A joint mortgage is a mortgage taken out by two or more people together. Everyone named on it is equally responsible for the repayments, whatever each person actually pays in. So if one borrower stops paying, the others have to cover the whole amount, not just their own portion. Most lenders will accept up to four people on a single joint mortgage, though some cap it at two.
Couples take out joint mortgages most often, but they work just as well for friends, siblings, or a parent and child buying together. The main draw is that your incomes are added together, so you can usually borrow more than either of you would manage on your own.
The mortgage and the ownership of the property are two separate things, and it helps to keep them apart in your head. The mortgage sets out who is responsible for the debt. The property title, the legal record of ownership, sets out who owns the home and in what shares. Depending on your situation, the two can be arranged quite differently.
Joint tenants vs tenants in common
When you buy jointly, you choose between two forms of legal ownership: joint tenants or tenants in common. As joint tenants, you both own the whole property together in equal measure. If one owner dies, their share passes straight to the other owner, whatever their will happens to say. Married couples usually go for this.
As tenants in common, each of you owns a set share of the property, and those shares can be equal or split any way you agree. If one person put in 70% of the deposit, for instance, they might hold a 70% share. When an owner dies, their share goes to whoever their will names, rather than passing automatically to the other owner. This tends to suit friends, unmarried couples, and family members buying together.
Your solicitor sets up the ownership structure when you buy. It matters most where you are putting in unequal amounts, or buying with someone you are not married to.
How much can you borrow on a joint mortgage?
Most lenders will offer around 4 to 4.5 times your combined annual income, once they are happy the payments are affordable. Two people each earning £30,000 could borrow somewhere between £240,000 and £270,000 together, against £120,000 to £135,000 each on their own. Our borrowing calculator gives you a quick estimate for your own figures.
The lender also looks at your outgoings, debts, and regular commitments as a pair. Where one applicant carries heavy debts or has a patchy credit history, it can pull down what you can borrow together, or push up the rates on offer.
Protecting your investment with a deed of trust
A deed of trust, sometimes called a declaration of trust, is a legal document that sets down what each person has put in and what should happen in different situations: one of you wanting to sell, a relationship ending, or someone no longer able to pay their share.
It is not a legal requirement, but it is well worth having if you are buying with anyone other than a spouse, particularly where you are putting in different amounts towards the deposit or the monthly payments. Having one in place gives both of you a clear record to fall back on, and it can head off a costly dispute later.
Get joint mortgage advice from Clearview
At Clearview Mortgage Solutions, we work with joint applicants all the time. We will look at your combined circumstances, talk you through the options, and put you in touch with solicitors who can advise on the right ownership structure for you.
Contact us for a free, no-obligation chat about buying a property together.