Tips for Buying a House/Apartment with a Partner or Friend(s)
It’s common for first time buyers in Scunthorpe to find it difficult to get their footing on the property ladder on their own so will look at the easier option of moving in with a partner or friend. There are plenty of benefits from going down this route. For instance, it won’t take a long time to save for a deposit, and lenders favour two or more people to buy a property together, splitting the equity in it and being responsible for the mortgage payments.
How many people can jointly own a property?
It’s likely to find that some mortgage lenders will allow up to four people to co-own property together. Due to multiple parties being involved, this will involve some discussion if something changed in circumstances. Be aware that if one borrower ends up not putting forward their contributions to the mortgage payments, the lender will go to the rest of the group for payment.
Each joint owner will still hold a legal right to live within their home unless a court rules otherwise. This still applies if an individual withholds their contribution, they still own part of the property.
This is why you need to be selective when it comes to who you are buying with.
In the circumstance where one of the co-owners would like to increase the mortgage in the future, all borrowers need to consent. It’s good to plan for down the line in case someone ends up with a different plan in mind or a change in circumstance.
Joint tenancy or tenancy in common?
Joint tenancy is an option that is popular amongst couples who are married, in civil partnerships or just cohabiting. Usually, tenants are relatives or friends that are interested in buying a house together. This does involve needing the applicant’s consent if you decide to sell or remortgage the property in the future.
When it comes to a tenancy in common, both co-owners will jointly own the property, however, there isn’t any legal requirement to do so in equal shares regardless of whether one party earn a lot more per month than the other.
For those that you a tenant in common, they have the freedom to sell or give away their share of the property t someone else if they decide to remove themself from the situation.
In the unfortunate event that one of you were to pass away, the property will be owned by the other owner on the mortgage. As a Mortgage Broker in Scunthorpe, we always recommend taking out Life Insurance in Scunthorpe within the mortgage process. By taking this out, it’s possible to use life insurance to pay off a mortgage.
What happens if one party stops making mortgage payments?
Each mortgage borrower is jointly and equally responsible for paying their mortgage payments on time. Therefore, if one party stops paying, the parties left have to make up for the remaining to prevent possible mortgage arrears.
It’s important to keep up to date on each payment in order to prevent the risk of falling into arrears which could stop you from getting a mortgage in the future. Go into this deal with the idea that you don’t own 50%, you own 100% jointly.
Removing a Name From your Mortgage
In the case where it doesn’t all go to plan, due to maybe being in a disagreement with your co-owners or the breakdown of a marriage/relationship, you may be exploring the option of removing others from your mortgage or removing yourself from their mortgage.
If you are in this situation, it’s best to speak to an expert Specialist Mortgage Advisor in Scunthorpe who can look at your options. Check out our article about ‘divorce & separation mortgage advice‘ for more information on divorce and mortgages.
Date Last Edited: January 24, 2024
