JOINT OWNERSHIP MORTGAGE
If you have a salary which is not big enough to let you to buy your first property on your own then you could consider getting a joint ownership mortgage and buying with friends or as a couple if you have a partner.
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Normally whenever couples buy a home together a mortgage lender will take into account both of their incomes.Lenders are usually prepared to lend two and a half times the joint incomes or three and half times the larger plus one times the smaller.Better deals than this are now becoming available. |
Should you want to buy a home with others then you must consider the fact that mortgage lenders will only lend jointly to a maximum group of four individuals including you. The other downside is that they will base the maximum they are prepared to lend on only the two highest incomes, and in many cases will actually do the calculation based on what you can afford rather than what you earn.
If you are already thinking about a joint mortgage of some type then call now and speak to our advisers. All our advice is free and impartial. Let us tell you how it all works, what is currently available and what it will cost you.
Buying with Friends and Relatives
If you are not a couple but want to buy a property with other people such as one or more friends then you can do this with joint ownership may be for you.
However if things go wrong then sorting out the resulting mess might be quite difficult so if you go this route you will want to make sure you have thought everything through very thoroughly before you apply for a loan.
At some point one of the joint owners may wish to go their own way for a variety of reasons either because they lose their job, want to set up home with a partner, want to move to another town or even emigrate. They may even fall out with you at some point in the future.
You all need to make sure all the bases are covered and that you all know what will happen in any given circumstance. You should therefore seek legal advice before buying together and get a document drawn up to cover all potential situations, good, bad and ugly.
What is Joint Ownership?
Joint Ownership is quite simply when two or more people own a property together. It is different than the situation where ownership is shared with an organisation such as a Housing Association. Joint mortgages are mortgages taken out by individuals who own the whole of their property through joint ownership.
Joint and Several Liability will apply to all the individuals who take out the joint mortgage. This means that each individual has the responsibility to pay off the whole of the mortgage and not just a percentage or share. If one individual does not pay then the others will have to cover their payments.
Legally there are two distinct ways in which you can share the ownership of your home.
Joint Tenants
As joint tenants (this is just legal jargon and does not mean you are renting) you have equal rights to the whole of the property, rather than a specific share or percentage. This does mean however that no individual can sell the property without agreement from the others.
Also if one party dies then the others automatically inherit the deceased’s ownership regardless of anything that is written in their will.
If you want to leave what you consider to be your share of the property to someone else when you die you will have to change the legal ownership of the property to a tenancy in common. This is quite an easy process and you can do it without the other owners’ agreement, but you will need legal advice to do it correctly.
As joint owners you all have equal rights to live in the property, which effectively means that no owner can be forced out without an order from a court. Also if there is a need to sell the property or even take out a loan using the property as security then all the joint owners have to agree to do so.
This kind of joint mortgage home loan is therefore a great solution for married couples or partners in a long-term relationship who want to buy together. However it may not be such a suitable option when friends want to own together especially if they have different amounts to contribute to the deposit and or purchase price.
Tenants In Common
This is a much better type of joint ownership for friends and relatives wanting to buy together as it means each individual will have their own specifically defined share in the property.
The shares can still be all equal but they don’t have to be, so ownership is more flexible and the percentages can be split any way you want.
This option may also appeal to couples where the initial contribution of each is different, and to parents who may wish to help their son or daughter but still retain their proportion of the ownership.
If you were to die then your share of the home does not automatically pass to any of the other legal owners. Your will takes priority so your ownership share will pass to whoever you have named in your will or if you do not have a will it will go to your next of kin. You could even word your will so your share does in fact go to the other owners, but it is only you that can make this choice.
You may even get out another loan and use the equity in your share of the property as security.
It is also possible to change your ownership into a joint tenancy but only if you can get all the other owners to agree.
Whichever way you choose to go, make sure you always understand the implications of what you are about to do as trying to fix it later could be expensive, because if things go wrong you are likely to need the help of a solicitor.
