Joint mortgages

Applying for a mortgage with someone else

Getting a joint mortgage with a partner, friend or family member means you can share ownership of your home. What’s more, splitting the cost of a mortgage may help you afford a more expensive property than you can get on your own.

How do joint mortgages work?

If you want to share the cost and ownership of property with someone, you’ll usually need to take out a joint mortgage. While most joint mortgages are held by two people, some lenders will let up to four people buy a home together. A joint mortgage will be in both (or all) of your names, meaning you’re each responsible for paying it back.

Can I get a joint mortgage?

Getting a joint mortgage is broadly similar to getting a mortgage on your own. The lender will look at several different factors to help them make up their mind:

• Information on your credit report, including your credit history and public record information (such as CCJs)
• Information you’ve given on your application form
• Information they may already hold on you if you’ve been a customer before

But with a joint mortgage, they’ll also want the same information about the other applicant. If one of you has a significantly worse credit history than the other, then you may want to think about whether it would be a better idea to get a mortgage solely in the name of the one with the better credit history.

Some of the things on your credit report that might make lenders feel you could be a risk:

• Making a lot of recent applications for credit
• Having missed or late credit payments
• Not being on the electoral register
• Having defaulted or delinquent credit accounts

To get an idea of how a lender may view you, it’s a good idea that you both check your free Experian Credit Score The better your credit score, the higher your chances of getting the mortgage you’re after.

As with all mortgage applications, saving up a decent deposit and making sure you’re within your budget can put you in a strong starting position.

How can a joint mortgage affect my credit score?

When you apply for a mortgage with someone else, you create a financial association with each other. You’ll both see the other’s name in the section of your Experian Credit Report titled ‘Financial Associations’.

This means that when you next apply for credit, the lender will see your financial associate’s name and may look at their credit information when deciding whether to lend you money – even if you’re applying alone. This is because the lender may believe your ability to make repayments could be affected by your financial associate.

It’s worth noting that a joint mortgage isn’t the only thing that create a financial association. Credit reports become linked if two people have applied for any kind of credit together (e.g. a joint bank account).

Who owns what? Owning a home with someone else

You can own a house with another person in two ways – joint tenancy and tenants in common.

What is the difference between joint tenancy and tenants in common?

• Joint tenants means that you have equal rights to the whole property – i.e. you both own all of it together. Each tenant has the ‘right of survivorship’ – this means that if you die, full ownership will pass automatically to the other tenant(s). You can’t leave your ownership of the house to someone else in your will.

• Tenants in common means that each person owns a share of the home, and the shares may be of unequal value, e.g. one person owns 30% and the other owns 70%. If one of you dies, the share is not automatically transferred to the other owner – you can leave your share to someone else in your will.

Note that, as well as different ways of sharing ownership of your home, there are also different ways of owning property altogether, such as freehold and leasehold. It’s useful to know the difference before you commit to a place.

Selling or moving on

What happens if you have a joint mortgage and part ways

There are several different types of exit plans for a joint mortgage. These include buying the other person out of their share, selling them yours, or selling the house and each taking a share of any profits. If things aren’t going smoothly, you could look into getting mediation or going to court.

If you no longer share a mortgage with someone, but you’re still linked to them on your credit report, you can get in touch to ask us to break the link.

It can be worth drawing up a legal agreement before you commit to buying a house together, so that you’re clear on your responsibilities and rights when it comes to a joint mortgage, personal possessions, personal finances and household expenses.