What first-time buyers need to know about a joint mortgage

Joint mortgages are the norm for married couples. But new research shows more first-time buyers than ever are using them to get on the property ladder.

While house prices have dropped recently, there are signs the UK housing market is rebounding. And that could mean the market has now bottomed out.

That news won’t help first-time buyers who are still struggling to fund the purchase of their first home on their own. Research by Halifax shows two-thirds of first-time buyers applied for joint mortgages between December 2023 to January 2024.

So what is a joint mortgage and what do you need to know about before applying for one?

What is a joint mortgage?

A joint mortgage is a home loan where two or more people buy a home. They are equally responsible for repaying the debt.

Applicants might be a married couple but they can also be friends, business partners or any other combination of applicants. A joint mortgage is usually between two people but some lenders will offer a joint mortgages for up to four people.

How they work

Like any other home loan, securing a joint mortgage is based on a few basic steps. Each person borrowing completes a loan application or they can collectively complete a joint-loan application. If approved, the mortgage is issued in the names of all applicants.

Property ownership

You don’t necessarily have to split the property evenly. But be aware that you could be held responsible if the other person or people don’t meet monthly mortgage repayments. Joint ownership options include:

• Tenants in common: This allows you to have different shares of ownership in the property. You can choose who you leave your share to – and that doesn’t have to be the other owner or owners.
• Joint tenants: Joint tenancy means the tenants have equal rights to the property. This means if the home is sold they get an equal share of any profits. Or, if one person dies, the remaining owner or owners inherit the property.

Applying for a joint mortgage with friends

If you are a first-time buyer looking for a joint mortgage with friends, make sure you discuss how it will work before applying. You need to decide:

• How you’ll divide equity of the home (see the ownership options above)
• The amount everyone will contribute
• What happens if someone wants to leave the deal

Before you take out a mortgage with someone else you will need to make sure everyone is honest about their finances.

Credit checks are required, so if anyone has a bad credit score it’s best to know from the start. Check out our blog about why credit history matters.

It’s always worth getting a credit report and score before you make a mortgage application. While it isn’t essential, it will help you decide if there are any issues that need addressing before you apply.

What should I do next?

If you are considering applying for a joint mortgage, then you can do it yourself. But if you use a mortgage broker like The Mortgage Dog, they can access deals that are not available from high street lenders or comparison sites. Contact our experienced team for more details.

Your home may be repossessed if you do not keep up repayments on your mortgage.