Over the years, there has been massive inflation in property prices which has outstripped the cost of living. Sometimes, this results in a home buyer purchasing a property with a friend or partner in Derby so they can be able to afford a property.
It’s all about measuring affordability. Because there are two parties, lenders will be looking at two incomes rather than one which in turn could increase the maximum mortgage amount. By contrast, the mortgage will be more affordable for two people rather than one because there will be someone to split the costs with.
How many people can jointly own a property?
You may find that some mortgage lenders will allow up to four people to co-own property together. With multiple parties involved, this can result in some debate with changes in circumstances. A situation of this could be that one borrower stops their contributions to the group mortgage which would result in the lender chasing the rest of the group for payment.
All joint owners still hold a legal right to stay within their home unless a court rules otherwise. This means that the individual who is withholding their contribution doesn’t have to leave because they are still part-owner of the property. The point that has been mentioned are just some of the reason why it’s important to be careful about who you buy with.
In the case where one of the parties is interested in increasing the mortgage further down the line, it’s important that all borrowers agree to this. Planning ahead for down the line is wise and can cover you in case there is a change in circumstances.
Joint tenancy or tenancy in common?
A joint tenancy on a mortgage is a popular option amongst couples who are married, in civil partnerships or simply cohabiting. When it comes to tenants in common, these are usually beneficial for relatives or friends who are looking to buy a house together. For those looking to sell or remortgage the property in the future, you will need the consent of the other applicant.
Even though a tenancy in common involves you jointly owning the property, it doesn’t mean you have to when doing it equally in shares. As well as this, a tenant in common does mean you can act individually. Furthermore, acting individually means you sell or give away your share of the property freely if you decide to move away from the situation.
In the unfortunate event that one of you passes away, the property will be in possession of the other owner on the mortgage. This is where life insurance in Derby can serve as a benefit as the mortgage would be repaid at that point. Here at Derbymoneyman, we can help explore your life insurance option and find you a product that is perfect for your situation.
What happens if one party stops making mortgage payments?
When it comes to the upkeep of the mortgage payments, all mortgage borrowers are jointly and severally liable. In the case where one of the parties stops paying then all of the parties involved are required to make up for the shortfall to prevent possible mortgage arrears.
This is why it’s important to try to keep up with this as early as possible. Falling into areas could affect you negatively when it comes to getting another mortgage in the future. A good way to look at your mortgage situation is to see it as you don’t own 50% of a property, you own 100% of it jointly.
Removing a Name From Your Mortgage
In the case where things don’t go the way you intended them to, like a disagreement with your co-owners, or a separation of a marriage/relationship, this could result in you removing others from your mortgage, or removing yourself from their mortgage.
If you are in this situation, it can be helpful to speak to an expert specialist Mortgage Advisor in Derby who can explore your option for you. For further information regarding divorce and mortgage, take a look at our “divorce & separation mortgage advice” article.
Specialist Mortgage Advice in Derby
Date Last Edited: December 6, 2023
