What is a Joint Mortgage and how they work?

What is a joint mortgage?

A joint mortgage usually refers to a loan to buy a house where two people are named on the mortgage, but you can have up to four people on a joint mortgage. Your co-borrowers can be family, partners or even friends. Being named on the mortgage usually (but not always) means you own the property, too. Everyone named on the mortgage is equally liable to pay the whole mortgage payment, so if one person cannot pay their share, the other borrowers will be required to step in.

Read more: Can friends or siblings buy a house together?

How do joint mortgages work?

When you take out a joint mortgage with someone else, each person who is named on the mortgage is jointly liable for ensuring the repayments are made in full each month - which means if one person stops paying, the other will need to make the payment. Each person will also be a joint owner of the property.

However, this doesn't always mean you'll have a 50% share in the property. If you have a tenants in common mortgage, this means each co-owner's share is separate and reflects what each person has contributed to the deposit and repayments over the years. This can be a good option if you're buying with a friend, sibling or partner who has a different amount saved up, or earns a different salary to you.

With a joint tenant mortgage, all owners own an equal share of the property, even if they’ve contributed different amounts. This is a more common joint mortgage type used by couples.

You can read more about tenant mortgages in our guide here.

How many times your joint salary can you get for a mortgage?

With a joint mortgage, you will typically be offered between 4 and 4.5 times your joint salary for a mortgage. Because the mortgage loan size is based on your combined salary, buying a house together could increase the mortgage amount you are offered.

For example, if you earn £30,000 a year that means you could borrow £120,000. If you and your partner both earn £30,000 a year, together you could borrow £240,000, as this will be based on your combined income of £60,000.

You can also sometimes increase the mortgage you'll be offered if you qualify for enhanced borrowing schemes.

For example, if you're a first time buyer and work in a professional field (think key workers like nurses, doctors and teachers as well as professionals like lawyers and accountants), you could borrow up to 5.5 or even 6.5 times your salary with a Professional Mortgage or Key Worker Mortgage. Or, if you earn over £37,000 or £50,000 collectively, you could qualify for a 5.5x Income Mortgage.

Are joint mortgages easier to get?

Joint mortgages can be easier to get, as your mortgage affordability will be based on you both as opposed to one person. There’s lots of factors that influence how much you can borrow for a mortgage – but a major one is how much you earn. By combining your incomes together, you can increase the amount you can borrow, which can make getting the mortgage you need easier.

If you're combining your savings together, you'll also be able to put down a larger deposit, which should reduce the size of mortgage you need. This will reduce your Loan To Value (LTV), which should allow you to access lower mortgage rates - which will make your monthly repayments more affordable.

Read more: How to get a bigger mortgage

Can you get a joint mortgage without being married?

Yes, you can get a joint mortgage without being married. Mortgage lenders typically assess a joint application in the same way for unmarried and married couples, or friends buying together.

What happens if one person dies on a joint mortgage?

If you have a joint tenant mortgage and one person named on the mortgage dies, the surviving co-owner will become solely responsible for the mortgage and the repayments. If the deceased person had life insurance, the insurance company may cover or help with the remaining mortgage balance.

With a tenants in common mortgage, if one of the co-owners dies, their share in the home forms part of their estate, along with any savings, investments and personal items. If they have a will, their share along with the rest of their estate will be distributed based on the wishes outlined within the will. 

If they don’t have a will, the estate will be distributed based on intestacy rules. These rules can be complicated, but they essentially determine which relatives will inherit the estate by default if it’s not laid out in the will. 

This could mean that the remaining owners have to accept someone as a co-owner that they didn't originally agree to buy a property with. If the remaining owners wish to sell their home, they have the right to do this. The beneficiaries of the co-owner who passed away can’t initiate this process, even though they’ll own a share of the property.

What happens to joint mortgage when you separate?

If you and your partner decide to separate and own a home together, to remove one party from the joint mortgage you'll need to give them their share of the equity they hold in the property to buy them out.

If you have a joint tenancy mortgage, it's easy to work out the equity split. Simply divide the equity in the home by the number of co-owners.

If you have a tenants in common mortgage, you will each own a separate share. For example, one of you may own 40% of the equity in the home, the other 60%.

To work out the equity in the home, you'll first get the property valued by a surveyor. An estate agent’s valuation is not accurate and could over inflate the property’s worth.

Next, subtract the remaining mortgage balance from the value to get your equity. Then divide this by the number of property owners to get their share – unless there is a specific agreement that lays out how the equity should be split.

The next step is to buy out the other person in what's called a transfer of equity. Once the transfer of equity is complete, their name is removed from the title deeds to the property, making you the sole owner of the home and solely responsible for the mortgage. 

Read more: How to buy someone out of a property

Can a joint mortgage be transferred to one person?

Yes, you can transfer a joint mortgage to one person. Removing a name from a mortgage is a very similar process to remortgaging, and is the typical process couples go through when separating or going through a divorce. To do this, you'll first need the permission of the other person on the mortgage to remove their name.

Next, you'll need to let your existing mortgage lender know that you would like to transfer the mortgage to one person. They will then run through a series of affordability checks to ensure you can afford the mortgage on your own.

Joint mortgage but only one income

It’s quite common for joint borrowers to only declare one income on a mortgage application, particularly if someone is staying at home to look after a young family. The mortgage lender only assesses the income and outgoings that relate to the earner, but both borrowers are still credit checked. If the non-earning partner plans to return to work in the future, this can help support the mortgage application. 

Does a joint mortgage affect credit score?

Yes, joint mortgages affect the credit score of each applicant. When you take out a mortgage, you are taking out what is probably the largest loan in your life. Agreeing to enter a joint mortgage with someone means you're entering into a serious financial relationship with them.

Any black marks on their credit history, including something as small as a missed phone bill, may also affect your credit rating and could decrease the amount you can borrow. You’re also likely to be offered a higher rate of interest.

CheckMyFile will show your credit history from the four main credit agencies trusted by mortgage lenders, including Experian, Equifax and TransUnion, so it's easy for you to spot any issues which could be affecting your credit score. Get your CheckMyFile report here.

Can I get a joint mortgage with a parent?

Yes, it is possible for you to get a joint mortgage with a parent. If you’re in need of help affording a home, you can ask family or friends if they’ll join you on the mortgage as a guarantor. Their income will be added to yours which may increase the size of the mortgage you’re eligible for. Your relative isn't, however, named on the property title deeds which makes you the sole owner.

This new-style guarantor mortgage arrangement is known as joint borrower sole proprietor (JBSP), but we call them an Income Boost at Tembo.

Another way your parents could help you get a mortgage is through a Deposit Boost. Your parent can help increase the size of your deposit through remortgaging their own property to release equity and gifting the money to you. With a biggest deposit, this increases your mortgage affordability.

With a family Springboard mortgage or similar, first time home buyers can purchase a home without any deposit. Instead, parents or a helpful friend can deposit savings equal to 10% of the purchase price into a savings account with the mortgage lender. The savings, which earn interest, are held by the lender for between three and five years before being released. 

However, if you don’t keep up to date with your mortgage payments, your family or friend’s savings are at risk. They will not get their savings back until you have caught up with your commitments and have shown you are back on track. The lender can use some of their savings to clear your arrears if necessary.

You might also like: Can a parent help with a mortgage?

Can you get a joint mortgage as a student?

Yes, it is possible for you to get a joint mortgage as a student. You can use a parent-child joint mortgage to help boost your mortgage affordability so you can buy a home while at university.

Read more here: Can a student get a mortgage?