Taking that first step onto the property ladder can be a daunting process for some, especially if you’re planning to purchase a property by yourself. As a countermeasure, we hear from many First Time Buyers in Manchester who are interested in buying a property with a friend or their partner if it is appropriate to do so.
When calculating your maximum mortgage amount, lenders can consider the two incomes. Having two applicants can help increase your chances of being offered a mortgage as you’ll have someone to split the costs evenly.
It’s essential to consider that if one defaults, the other could also be liable for the full mortgage. As your friendly Mortgage Broker in Manchester, here are a few points we recommend to look out for when moving into a property with someone else:
Some lenders will allow up to four people to jointly co-own a property. It would help if you remembered that the more people who have an equal share in a property, the higher the chance of someone backing out. It’s why you need to be very cautious with whom you choose to purchase a property together.
There is an option to increase your mortgage later if you prefer. However, all borrowers will need to agree. Therefore, you need to think about your future and establish how long you are looking to stay within the property.
Joint tenancies are usually favoured by civil partnerships or married couples. If one of the joint tenants dies, then the property immediately is passed to the other owner. In the eyes of the law, joint tenants act like one.
This means joint tenancy is an option we commonly see married couples or applicants go for. This means that in the unfortunate case where either applicant passes away, the property’s ownership would pass on to the other owner.
If you both decide to remortgage or sell the property, both parties must agree to the decisions before proceeding with anything. If the applicants are relatives or friends that have bought together, ‘Tenants in Common’ is a potential option to go for. This is when you both equally own the property.
However, you aren’t obliged to do so in shares. This circumstance can occur when one party makes a more significant financial input than the other. If you are a ‘Tenant in Common’, you can act independently. For instance, you are allowed to sell or give away your share of the property to someone else.
A mortgage lender will state that all borrowers are jointly and severally liable. If one of you stops paying their share of the mortgage, the other(s) will have to make up the shortfall and pay the full amount.
When you buy a home together it isn’t with the intention of splitting up in the future, but regardless of what happens it’s a massive financial commitment and making changes to your mortgage further on down the line can often be a complex situation.
When there are children involved one person will be staying in the home but there may come a time that a person wants to take over the mortgage in their own right which will need efficient Mortgage Advice in Manchester.
The fact that a person has been paying the mortgage without any help from their ex, does not change the fact that the application was processed in joint names. Lenders will not be deterred to following either person who is named on the mortgage in the event of mortgage arrears, even if there is one person trying to upkeep payments.
Before removing a party from a mortgage, the lender will have to be adamant that the remaining applicant can upkeep the affordability on their own going forward and will lead to a full assessment of income regardless of whether you have kept up mortgage payments in the past or not.
Quite often in these situations, there is someone who can step in to replace the ex-partner such as a family member or a new partner. A Mortgage Advisor in Manchester is able to advise through this change.
In the event of a separation/divorce, It’s important to understand that all parties remain responsible for any joint financial commitments. This applies even if a person leaves the family home. This is the case even if an agreement is made between both parties that one person will make all the payments.
The mortgage payment on the old property will be taken into consideration if there is consideration of purchasing a new property in the future. Therefore it’s essential in these instances that a person seeks out Mortgage Advice in Manchester before making an offer. Some lenders are more generous as regards how much they’ll lend than others. At our Mortgage Broker in Manchester, we’ll take this into account when recommending the most suitable lender to apply for a Mortgage Agreement in Principle with.