Taking the initial step onto the property ladder can be an intimidating process, particularly for those planning to purchase a property individually.
To address this, we often hear from first time buyers in London considering the option of buying a property with a friend or partner. This approach allows the consideration of both incomes when determining the maximum mortgage amount, increasing the likelihood of mortgage approval.
However, it’s important to bear in mind that if one party defaults, the other may become fully responsible for the entire mortgage. As your trusted mortgage broker in London, we offer valuable insights on factors to consider when entering a property arrangement with another individual:
Some lenders permit up to four individuals to jointly co-own a property. However, it’s essential to exercise caution in selecting co-owners, as a higher number increases the likelihood of someone withdrawing from the arrangement.
Additionally, if you decide to increase your mortgage later, unanimous agreement from all borrowers is necessary. Therefore, considering your future plans and the duration of your stay in the property is key.
Joint tenancies are typically preferred by civil partners or married couples, where the property automatically transfers to the surviving owner in the event of one’s death. Joint tenancy aligns both owners as a single entity in legal terms.
This arrangement is common among married couples, ensuring smooth ownership transfer in unfortunate circumstances. However, for relatives or friends who jointly purchase, ‘tenants in common’ may be an alternative.
In this scenario, both parties equally own the property, but they aren’t obliged to hold equal shares. This allows for individual actions, such as selling or transferring one’s share.
Mortgage lenders assert that all borrowers are jointly and severally liable. If one party fails to contribute their share of the mortgage, the others are obligated to cover the shortfall and pay the full amount.
Despite the intent not to split up in the future, unforeseen circumstances may arise, necessitating changes to the mortgage. When children are involved, the remaining party may wish to take over the mortgage independently.
Efficient remortgage advice in London becomes important in such cases. The lender will need to confirm the remaining applicant’s ability to afford the mortgage independently, even if past payments were made without assistance.
In situations involving a change in ownership, a mortgage advisor in London can guide through the process.
In the event of separation or divorce, all parties remain responsible for joint financial commitments, including the mortgage on the family home.
Even if an agreement is made for one party to make all payments, lenders consider the mortgage on the previous property when assessing eligibility for a new mortgage. Seeking mortgage advice in London before making an offer is essential in these instances, as lenders vary in their lending policies.
Our mortgage broker in London considers these nuances when recommending suitable lenders for mortgage agreement applications.
Date Last Edited: January 31, 2024