Thinking of Buying a Property with a Partner or Friend?
Here are a few points to watch out for
Purchasing a property with a friend or partner can sometimes be the only practical way to get on to the property ladder. Together you can raise a bigger deposit and will share the costs. However, if someone defaults you could be liable for the full mortgage. Here are a few points to look out for:
How many people can jointly own a property?
You can have up to four people jointly co-own a property. Joint owners have a legal right to stay in their home unless a court rule otherwise. Also, if you would like to sell or take out extra borrowing against the property all owners will have to give their consent. Unless a court order state otherwise.
Joint Tenancy or Tenancy in Common – What’s the difference?
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 you can’t remortgage or sell the property without the agreement of the other owner.
Tenants in common are the popular choice for relatives or friends who are buying together. Whilst it still means that you jointly own the property, you do not have to own equal shares. You can act individually, meaning that you can sell or give away your share of the property. Technically you can mortgage your share of the property but finding a lender that will lend in these circumstances would be very difficult. Enforce a sale if the mortgagor was to default would be difficult.
What happens if you have a joint mortgage, but the other parties stop meeting the mortgage payments?
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.
How do I remove my ex-husband/wife from my mortgage?
Obviously, when you buy a home together you don’t do so with the intention of splitting up in the future, but it is a massive financial commitment and making changes to your mortgage further on down the line is not always easy.
When there are children involved, quite often it’s the mum that stays in the property but regardless of gender, there may come a time that whoever is “in situ” wants to take over the mortgage in their own right. This is not always straightforward!
The fact that you may be able to demonstrate you have been paying the mortgage without any help from your ex, does not change the fact that at the point of application you bought the property jointly or, in other words, in the event of mortgage arrears there are 2 people the Lender is allowed to pursue.
Before removing a party from a mortgage, the Lender has to be sure that the remaining applicant has the means to be able to afford the mortgage on their own going forward and this means 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 indeed your new partner.
How do I remove my name from my ex-partner’s mortgage?
In the event of a separation/divorce, you need to understand that you remain responsible for any joint financial commitments. This applies even if you leave the family home. This is the case even if you make an agreement with your ex that they will make all the payments.
Your mortgage payment on your old property will be taken into consideration if you want to buy a new property in the future. Therefore it’s essential in these instances that you take Mortgage Advice before making an offer. Some Lenders are more generous as regards how much they’ll lend you than others. We’ll take this into account when recommending the most suitable Lender to apply for a Mortgage Agreement in Principle with.