Buying a Property with Others in Durham
Stepping into the mortgage world for the first time can be an intimidating but exciting experience for a number of home buyers even more for those looking to purchase a property on their own.
As an alternative, we do find that many first time buyers in Durham look at purchasing a property with a friend or partner if they are able to do so.
Lenders will factor in both your income as well as your co-borrowers’ so they can work out your maximum mortgage amount. The benefit of having two applicants is that the mortgage costs will be split between you both which, in turn, can help increase your chance of getting offered.
In the event that you default, your co-borrower could be responsible for the full mortgage, and vice versa.
With the help and expertise of being a First Time Buyer Mortgage Broker in Durham, we have collated a guide of helpful tips we recommend you take into account when into a property with a friend or partner.
How many people can jointly own a property?
Some lenders may allow you to co-borrow with up to four people jointly.
This may seem like a safe option with multiple parties creating more financial security when paying the mortgage, however, the chances of someone pulling out before the term ends can be higher. Because of this, it is wise to be selective with who you buy a property.
If you decide that you want to increase your mortgage further down the line, you and your co-borrowers will all have to agree to this. Therefore, it’s good to plan ahead for your future and your plans for the property.
Joint tenancy or tenancy in common – what’s the difference?
Normally, joint tenancies are utilised by many civil partnerships or married couples. In the case where half of the party dies, the property would instantly be given to the other half. From a legal perspective, joint tenants are two halves of one whole, one borrower.
When it comes to remortgaging or selling the property, both of you will need to agree before proceeding with the mortgage.
For applicants that have co-borrowers that are friends or family, it is likely that you will go for the option of ‘Tenancy in Common’. This means that you both own your part of the property.
You do not need to split your share equally so if one of you is making a lot more income than the other, you will own more of the property than the other.
With this in mind, as a ‘Tenant in Common’, you have the right to act independently. This gives you the option to sell or give away your share if you wish.
Joint Mortgages & Removing Names
What happens if you jointly own a mortgage, but your co-borrower(s) stop meeting the mortgage payments?
A mortgage lender will stress the fact that all borrowers are jointly and severally liable which means that if one of your bo-borrowers decides not to pay their part of the mortgage, it’s your responsibility to keep up the payments.
How do I remove my ex-husband/wife from my mortgage?
The intention of looking to buy a home with your then other half doesn’t come with the assumption that you’re going to split before the term is up. It is a large financial commitment to make anyway and can become complex if you are wanting to make any changes.
This can become even more of a challenge when children are involved. In most cases, the parent who will stay with them usually stays in the current property whilst their ex-partner moves out to look possibly look for their own mortgage. Regardless of if you are staying or going, both parties will need the help of a Mortgage Advisor in Durham for divorce and separation.
Whether the situation is that you pay for the mortgage with the assistance of your ex or you pay the mortgage on your own, it doesn’t alter the joint financial commitment you have with them. Therefore, in the event of arrears, the lender will chase both parties.
Removing anyone from a mortgage means that only you will be in charge of paying and managing the payments. From a lender’s point of view, they will need to be confident that you are able to manage these mortgage payments so will reassess your income to make sure this is achievable before they will proceed.
We do find that applicants who are unable to afford a mortgage on their own will go down the route where they apply jointly again with a friend, family member or new partner. These situations will be best with the assistance of Mortgage Advice in Durham.
How do I remove my name from my ex-partner’s mortgage?
As mentioned, when it comes to divorcing or separating your partner whilst on a mortgage, both parties are still jointly liable for the property and its mortgage payments.
In the circumstance where you are the one to leave and wanted to remove your own name from their mortgage, it’s not as simple as coming to an agreement between the two of you, they would need to get in touch with their lender.
For those looking to get a mortgage on their own, the lender would take into consideration the property you are currently tied to, so it’s key to make sure that you are removed from the previous mortgage.
In these circumstances, you should always seek Mortgage Advice in Durham.
When it comes to the amount they will be willing to lend you, you will find that some lenders will be more generous than other lenders. This is something your designated Mortgage Advisor in Durham will factor in when recommending the most appropriate mortgage lender to apply for a Mortgage Agreement in Principle with.
Date Last Edited: December 6, 2023
