A joint mortgage is when people group together in order to get a mortgage. This is becoming increasingly popular due to the rising house prices and the difficulty first time buyers have of getting on the property ladder.
If you would like to proceed with a friend or partner there are various things to consider before taking out a joint mortgage.
- If you are buying with a partner but are not married in legal terms you are separate individuals and so would be treated as such. It is highly advisable to make a written agreement and make sure both names are put on the title deeds
- If it is a joint property the other person will have a veto on the sale. This could be awkward if things went wrong. To avoid this you can write an agreement so that neither person can have a veto over selling the house.
- There is a choice between having a joint tenancy and a common tenancy
Joint tenanacy is when you share the mortgage 50-50. If one person dies it automatically goes to the other person. A common tenancy means that you can have a variable amount of ownership. E.g. somebody with a bigger share of income could own 60%
- Make wills so you can decide where the house will goto. Otherwise your partner may gain nothing.
Advantages of Joint Mortgages
- They enable a bigger mortgage and can get you on the property ladder.
- They may avoid having to get a higher interest self certification loan
Disadvantages of Joint Mortgages
- They require careful planning and written agreements in the case of potential disputes.
- If there is a breakdown in the relationship between the two people it can become problematic and messy to resolve