Buying a Property with a Friend or Partner?
Purchasing a property with other people | Mortgage Advice in Derby
Property inflation has outstripped wage increases over the years. In contemporary settings, to be able to afford a property that they wish to purchase, a person may have to buy with someone else. The reason for this is affordability and Lenders will be calculating two incomes to figure out the maximum mortgage amount. Of course, the mortgage will be more affordable between two people because there is someone to share the costs with.
How many people can jointly own a property?
Some lenders allow upto four people jointly co-own a property. With regards to one borrower stopping their contributions to mortgage payments, any joint owners still hold a legal right to stay within their home unless a court rules otherwise. Therefore, you need to be very selective about who you buy with.
If a person wishes to increase the mortgage at some point in the future, then all borrowers need to consent. So it’s best to plan ahead for down the line just for in case someone wants to opt for a different route or situations change.
Joint Tenancy or Tenancy in Common?
It is common with couples who are married, or in civil partnerships, to go for the option of Joint Tenancy. In the occasion of one passing away then the property will be in possession of the other owner on the mortgage. If you have taken out Mortgage Life Insurance, the mortgage would be repaid at that point also. Though, you will need the consent of the other applicant if you are wanting to sell or remortgage the property in the future.
Tenants in common is often chosen by relatives or friends that choose to buy together. You will still jointly own the property but you are not forced to do so in equal shares. This works out best if one party is making a bigger financial input than the other. Additionally, you can act individually if you are a tenant in common. From this you’re able to act individually and can freely sell or give away your share of the property to someone else.
What happens if one party stops making mortgage payments?
All mortgage borrowers are jointly and severally liable for the upkeep of the mortgage payments. If one of the party stops paying then all have to make up for the shortfall to prevent possible mortgage arrears. It’s important to stop this dilemma as early as possible as falling into arrears could possibly stop you from getting another mortgage in the future. The best way to view your mortgage situation is to view it as you don’t own 50% of a property, you own 100% of it jointly.
How do I remove my ex-partner from my mortgage?
Removing someone from a mortgage can be very challenging as Lenders need to be thorough and confident that a person can afford the mortgage payments on their own before allowing this. No-one who applies for a mortgage with another person does so with the intention of things not working out but unfortunately, it does sometimes happen, therefore it is extremely important to remember how big of a financial commitment getting a mortgage really is and how challenging it is to make changes further down the line.
Even if you are able to show that you have been upkeeping payments since your ex has moved out, it doesn’t guarantee that a Lender will agree to your request to have the mortgage put into a sole name. Lenders prefer the idea of there being two people to pursue in the event of arrears occurring. If a Lender had to remove someone from a Mortgage it would mean that they would have to carry out a brand new affordability assessment, the same process they would have to do at the original point of purchase.
If the event rises that a Lender declines your request for a Sole Name Mortgage then a Mortgage Advisor will be able to help you see if there are any other Lenders available to agree to your request and transfer the mortgage into your own name.
An alternative option for this would be to ask close relatives to see if they are able to help out, ways in which they can do this would ways such as replacing an ex-partner on your mortgage or by gifting you a lump sum to reduce the amount owed.
How do I remove my name from my ex-partner’s mortgage?
If by chance, you and your partner do split up and leave the property in question then you remain responsible for mortgage payments. Even if it’s in agreement between you and your ex that they will make all the payments. If you are sending your partner money each month, you should keep an eye on your own credit report to ensure that they are paying the mortgage because if they default it will impact your own score.
If you are still connected to an old mortgage then the payments for that will be taken into account if you are looking towards buying a new home and ultimately Lenders might not Lend as much as you might like. Buying a home with anyone is a risk to it’s best that you plan ahead for as many outcomes as possible, unquestionably it’ll be impossible to plan for all scenarios as there are too many factors and variables but if you do fall into hardships then a Mortgage Advisor is always on hand to help.