How do joint mortgages work?

If you want to buy a home with someone else, you need a joint mortgage. 

You can take out a joint mortgage with your partner, a friend or a relative. 

Some lenders even offer joint mortgages for groups, meaning you could buy a property with two or three friends. 

Each borrower has to meet the mortgage lending criteria and is jointly liable for the mortgage payments - which means you have to cover the whole amount if the person or people with whom you have joint liability don’t pay their share.

Ownership of the house or flat is also shared; the percentage owned by each person should be stated in the property deeds. 

According to the Financial Conduct Authority, joint mortgages accounted for more than a third of the mortgages taken out in the UK in the last three months of 2021.

What is a joint mortgage?

A joint mortgage is simply a home loan taken out by two or more people rather than a single borrower. This is usually done so that they can afford a more expensive property.

Example

Let’s say a couple wants to buy a home together. Each one earns £26,000 a year. Most joint mortgage providers will allow them to borrow around four times their combined income, meaning they can borrow £208,000. Assuming they have a £50,000 deposit, they could buy a property worth £258,000. Their monthly repayments would be around £1,100 over 25 years, based on an average interest rate of 3%.

You don’t have to earn the same as one another or put equal amounts towards the deposit or monthly repayments to get a joint mortgage.

A joint mortgage means joint ownership and joint responsibility for making mortgage repayments, regardless of how you decide to split them. 

Even if you have a joint mortgage where one person usually covers the entire monthly repayment, the responsibility to repay could fall solely on you if the other person disappears. 

How do joint mortgages work?

When you take out a joint mortgage, each person named on the contract is jointly and severally liable for ensuring the repayments are made in full each month.

So you’ll have to foot the bill if the other people don’t.

You also become a joint owner of the property in question, although you don’t always have to own a 50% share. 

Agreeing to share a mortgage with someone means entering into a serious financial relationship with that person. So any black marks they have on their credit history - such as unpaid loans - may also affect your credit rating when other lenders conduct credit checks on you.

Who can take out a joint mortgage?

Joint mortgages are usually taken out by couples, including married couples, unmarried couples and civil partners. 

However, your life partner is not the only person you can buy a home with; here’s a list of people with whom you might consider taking out a joint mortgage:

• Your husband or wife

• Your civil partner

• Your girlfriend or boyfriend

• Your friend (or up to three friends)

• Your relative

• Your business partner

Joint mortgages for unmarried couples

According to Office for National Statistics estimates, there are more than 5 million cohabiting unmarried couples in the UK today. The number of couples opting for civil partnerships is also growing. 

It follows, therefore, that a large percentage of the couples taking out joint mortgages today are unmarried or in civil partnerships. 

This has no real impact on whether or not a couple could or should take out a joint mortgage, but it may affect how you decide to own the property in legal terms. There are two options:

• Joint tenants - you each own a 50% share, and the surviving mortgage holder automatically inherits the property if the other owner dies

• tenants-in-common - one person can own a larger share than the other, and your partner does not automatically inherit the property when you pass away

Joint mortgages with your parents

You can get a joint mortgage with a parent or family member who has the means to help you afford a property or buy part of one as an investment.

But is it better to do a joint mortgage, or should you use another type of home loan, such as a guarantor mortgage?

When taking out a joint mortgage with your parents, there are two main choices:

• A standard joint mortgage where each party has joint ownership of the property

• A joint-borrower-sole-proprietor mortgage where the family member accepts joint responsibility for the payments but does not become a joint owner of the property

With guarantor mortgages, on the other hand, a loved one puts up their own property or savings as a guarantee that you will meet your repayments. This means that they risk losing their assets if you default.

How much can you borrow with a joint mortgage?

The average mortgage taken out in Q3 2021 was just under £193,000, according to Statista. 

The amount you can borrow with a joint mortgage will generally be higher than the sum you could borrow alone.

Generally, most lenders will offer to lend you around three to five times your combined income.

The exact amount will also depend on:

• The size of your deposit

• Whether you are employed or self-employed

• The outgoings and credit records of both parties

How does joint ownership work?

You can choose to own a property jointly with one or more people in two different ways:

• As joint tenants, which means you all own an equal share

• As tenants-in-common, which means you can own different shares depending on how much you pay in terms of a deposit or as monthly mortgage payments

You should specify the type of ownership in the deed of trust, which is a legal document that specifies the percentage of the property each of you owns.

According to Darren Meehan from the mortgage broker Bright Money Independent.“You may well want to own a property as tenants-in-common if one person is putting in more deposit.

“Other reasons to choose tenants-in-common include if you want your share of the property to be passed to someone other than the surviving joint owner.” 

Joint tenants

Owning a property as joint tenants means:

• If one borrower dies, the other borrower automatically inherits their share of the property

• If you sell the property, any profits are split equally between you

• If you remortgage the property, you’ll need to get another joint mortgage

Tenants-in-common

Owning a property as tenants-in-common means: 

The shares you each own can be for whatever percentage you choose

• You can sell your share in the property separately if you wish

• You can leave your share of the property to someone else in your will

Example

If you buy a property worth £150,000 on a tenants-in-common basis with your partner and you own 60%, your share will be worth £90,000 once the mortgage is paid off (assuming there’s no change in the property value).

What happens if you have a joint mortgage and split up?

If you split up with your partner, your joint mortgage can be transferred into one name, providing that person can afford to buy the other out and cover the repayments. 

The same applies if you buy a home with a friend or relative and you fall out with them, or they become unable to work or need to move away for a new job. Other options for when you split include:

• Selling the property and sharing the proceeds

• Renting out your old home and sharing the rental income between you

But remember, while your name is on a joint mortgage agreement, you remain liable for meeting the repayments in full if the other person or people cannot.

If the person you have a joint mortgage with dies during the mortgage term, their share of the loan is usually be paid off by the life insurance lenders generally insist that you take out alongside a mortgage.

However, you may still have to sell up if you own the property as tenants-in-common and they have left their share to someone else in their will.

How do you apply for a joint mortgage?

Making a joint mortgage application is the same as applying on your own. 

You’ll need to provide a mortgage deposit and prove you can afford the repayments and associated costs to be accepted. You can do this by providing documents showing the income and outgoings of all applicants.

You can get an idea of how much you can afford to borrow with a joint mortgage using our mortgage affordability calculator.