Joint mortgages for first time buyers
But don't panic! If you aren't earning enough to cover the cost of a mortgage alone, you may be eligible for a joint mortgage. This is an option generally chosen by married or unmarried couples but if you want to move into a house with a family member or friend, this could also be an option for you.
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In this guide
Are joint mortgages available for first-time buyers?
Joint mortgages are available to first-time home buyers so if you’re looking to get on the property ladder, you may be able to do so if you meet the mortgage lender’s criteria.
With a joint mortgage, the earnings of all parties buying the property are combined so you may qualify for a more affordable mortgage with a lower loan-to-value.
Joint Tenants vs Tenants In Common
When getting a joint mortgage as a first time buyer, you will have two types to choose from.
Joint tenants
Lots of couples buy a property together as ‘joint tenants,’ be they married or in a civil partnership, but as mortgage lenders offer joint mortgages to up to 4 applicants, you don’t necessarily have to be in a relationship.
With this option, each party has an equal share of the property and they are all jointly responsible for the mortgage repayments. If the property is sold, the proceeds are split evenly.
If one of the borrowers dies, the other person/s will automatically inherit the property.
Tenants in common
With this type of joint mortgage, the property can be shared equally but it doesn’t have to be. As such, one person could have a 60% share and another could have a 40% share. But regardless of the percentage, each person is jointly liable for paying off the mortgage debt, in whatever portion each party agrees upon.
A solicitor will need to draw up a ‘deed of trust,’ a legal document that shows how much of the property each person owns.
As with the previous option, up to four people can buy a property as ‘tenants in common.’
With this type of home ownership, sale proceeds can be split equally or unequally if the house is sold.
If one of the borrowers dies, their share does not have to go to one of the other parties. As such, they can decide to leave their share of the property to anybody they like when making a will.
To learn more about the differences between the two types of home ownership, check out our guide to joint mortgages.
Is it hard to get a first-time buyer joint mortgage?
It’s not overly difficult to get a joint mortgage as a first-time buyer but as with a solo mortgage, you will need to meet the eligibility criteria set out by the lender. The same applies to the person/s buying a house with you.
Lenders set their criteria around credit history, age, employment type, income, and a few other factors, so all parties will need to satisfy the lender that they meet the requirements.
Getting a joint mortgage can be tricky if one or more of the joint borrowers fails to meet the lender’s requirements.
However, it’s not impossible. At YesCanDo Money, we can find the mortgage lenders that are likely to give you a joint mortgage, including the niche lenders who set fewer limitations.
We can also explain joint ownership and joint mortgages to you and let you know the pros and cons of taking out such a mortgage as opposed to solo mortgages.
How do first-time buyers apply for joint mortgages?
To apply for a first-time buyer joint mortgage, you could go directly to a mortgage lender. But as there are thousands of deals on the mortgage market, you won’t be guaranteed the best one.
Therefore, we recommend our services to you. We have access to lenders who specialise in joint mortgages so we will be able to find the best deal for you with the lowest monthly repayments. We can also give you specifics on the different ownership structures and how each person you are applying with can improve their mortgage chances.
Get in touch with us if you would like to know more and we will arrange our first consultation with you.
How can I get a joint mortgage as a first-time buyer?
Before applying for a mortgage, you need to do the following.
Save up for your share of the mortgage deposit
Encourage the other parties to save for their share of the deposit
Take steps to improve your credit score (and make sure the other applicants do the same)
Decide how you want the joint ownership to be set up
Use the income of each applicant to calculate how much you may be eligible to borrow (use a mortgage affordability calculator)
Get the ball rolling with a mortgage broker
What is the criteria for a joint mortgage?
Each applicant will need to meet the lender’s eligibility criteria when applying for a joint mortgage. The lender’s criteria will typically be based on:
Credit history – The higher each person’s credit rating the better but mortgages can still be approved for people with a low credit score if their credit issues are in the past and are not overly severe.
Deposit – Most lenders require a 10% deposit but if you can afford more than this, you will be eligible for mortgage deals with lower interest rates. For a joint mortgage, the deposit doesn’t need to be equally split between each applicant.
Property type – Lenders typically steer clear of properties made from non-standard materials, such as timber or steel frame so your mortgage chances are improved if you consider a standard bricks-and-mortar property.
Age – Some lenders are wary of lending to applicants over the age of 55 but it’s still possible to get a mortgage at or over this age with the help of a mortgage specialist.
Employment type – Mortgage providers generally prefer applicants in full-time permanent employment but if one or more of the applicants is self-employed or working part-time, a mortgage broker can help you choose the right lender.
Income – Whereas lenders base their affordability calculations on one person’s income for a solo mortgage, they will base their calculations on the combined income of all the borrowers applying for a joint mortgage. As such, your chances of mortgage approval can be improved, even if one applicant earns a lot less than the other/s.
Are joint mortgages a good idea for first-time buyers?
Joint mortgages are an excellent option for first-time buyers, especially those who don’t have enough income to qualify for a mortgage.
With a joint mortgage, you can:
Increase the amount you’re eligible to borrow
Pool your savings for the mortgage deposit
Lower the interest on your monthly mortgage payments
Have other incomes to rely on for the monthly repayments if your income takes a dip
If you were taking out a mortgage alone, there is the chance that you wouldn’t qualify for the best deals as only your income would be taken into account. If you couldn’t raise funds for a higher mortgage deposit and if the lender saw you as a risk, you would have to settle for a mortgage with higher monthly payments over the mortgage term due to the increased mortgage interest rates.
As such, a joint mortgage could be the best option but both you and the other applicants need to understand that you’re all severally liable for making sure the mortgage repayments are made each month. If one person doesn’t pay their share and the other applicants can’t cover the shortfall, you could all lose ownership of the property. This is the bad news but provided everybody understands they have joint responsibility for the mortgage and they keep up repayments, the good news is that you can get on the property ladder sooner.
To learn more about what a joint mortgage involves, talk to a member of our team. We will also discuss other first-time buyer options with you, such as a guarantor mortgage, if you want to explore other avenues.
Frequently asked questions
To learn more about how joint mortgages work, get in touch with our team. We will give you all the information you need to know and we will explore all of your mortgage options with you.
If you have any questions, we will answer them for you. But for now, the following are just a few of the questions that our customers have when they use our services.
How will the lender check my credit score with a joint mortgage?
When you apply for a mortgage, the lender will scrutinise the information that is on your credit report. They will also run credit checks on the other applicants. The information on the credit reports contains information from the last 6 years so if you and the other people you are entering into a financial relationship with had credit issues before then, your application might still be accepted.
But if in the last 6 years one or more joint applicant has any of the following on their credit report, there is a chance that your application for a home loan could be rejected.
No credit history
Defaults
Late or missed payments
CCJs (County Court Judgements)
IVAs (Individual Voluntary Agreements)
Bankruptcy
Repossession
There are niche lenders who do offer mortgages to people with bad credit so your chances of mortgage approval aren’t zero. But to get the best mortgage deal with the lowest interest rate, the applicants wishing to borrow money for their own home should try to improve their credit score before applying for a mortgage.
How much can I borrow with a joint mortgage?
The amount you will be eligible to borrow will be based on the income multiple used by the lender. The income multiple used by the majority of lenders is 4 or 4.5 x income but there are lenders who use income multiples of 5 and 6.
As you are applying for a joint mortgage, the amount you will be eligible to borrow will be based on the multiple of the combined income. Therefore, you will be able to borrow more money with a joint mortgage than you would with a solo mortgage.
My partner is a first-time buyer but I’m not, what are my options?
As a first-time buyer, i.e. somebody who has never bought a residential property before, you will usually qualify for financial help from a variety of different schemes. You will also avoid stamp duty land tax if you’re buying a property that costs less than £625,000.
However, the situation changes if your partner is a first-time buyer and you’re not, as you won’t be eligible for some first-time buyer schemes and you will have to pay stamp duty.
You may still be eligible for the shared ownership scheme and your partner could take out a Lifetime ISA (if they are under 40) to make the mortgage more affordable, so there is some help available to you. If your partner has a Help-To-Buy ISA, this is another way to save for a new home, but as this is no longer open to new applicants, your partner won’t be able to use it if they haven’t applied already.
Can I get a joint mortgage with my parents?
Yes, you can get a joint mortgage with your parents as either Joint Tenants or Tenants in Common.
But assuming that your parents aren’t first-time buyers, you would need to pay stamp duty on the property and if you ever decided to sell your home, you would be required to pay Capital Gains Tax if the property was classed as a second home for your parents.
Despite these disadvantages, a joint mortgage with your parents is a good way to buy your own property if you need a helping hand getting a mortgage.
Your parents can help you purchase a property in other ways too. So, instead of a joint mortgage, your parents could help you buy your home with a gifted deposit or they could loan you the money needed for a deposit.
A joint borrower sole proprietor mortgage is another option. This is like a joint mortgage but while your parents will be jointly responsible for paying off the mortgage, only you will be named on the property deeds.
Guarantor mortgages and Offset mortgages are two other ways you could get a loan with the help of your parents. Guarantor mortgages are particularly worth looking into but to learn more about both, get in touch with our mortgage team.
How much deposit do I need to save for a joint mortgage deposit as a first-time buyer?
For most joint mortgages, you will need a mortgage deposit of 10% of the purchase price of the property. However, there are some lenders who will accept a 5% deposit if your financial circumstances mean you can’t afford to pay more.
But as you will be applying for a joint mortgage with a partner, friends, or family members, you may be able to access a better mortgage deal with a lower interest rate if you can combine your joint incomes for the deposit.
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