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Joint mortgages explained

Find out how joint mortgages work for couples, family and friends, plus how much you can borrow with a joint mortgage.

In this article
What is a joint mortgage? Who can get a joint mortgage? How much can you borrow with a joint mortgage? Are joint mortgages different from standard mortgages?
Disadvantages of joint mortgages Splitting up a joint mortgage Should I get a joint mortgage with my parents?

What is a joint mortgage?

A joint mortgage is a home loan that's shared between multiple people - usually two, but occasionally up to four.

You'll probably take out a joint mortgage if you buy a property with a partner, spouse, friends or family. 

Each owner will usually be named on the property deeds and will be jointly responsible for making the mortgage repayments.

It’s therefore vital that you trust the person (or people) you’re applying for a joint mortgage with, and know that they will be able to pay their share. 

There are two types of joint property ownership, which you can read about in our guide, tenants in common vs joint tenancy.

 
Who can get a joint mortgage?

Anyone can apply for a joint mortgage. But you might be rejected if you or one of your co-applicants has bad credit, or will exceed the maximum age limit during the term. 

There are no restrictions on who you can get a joint mortgage with. It could be a partner or spouse, friends, siblings or parents, or even business partners.

But you need to think carefully before you enter into an arrangement to buy a property with someone else. You’re creating a financial link between yourself and another person, which means that if they get into monetary difficulty it could affect how lenders view you.

How much can you borrow with a joint mortgage?

One of the big advantages of a joint mortgage is that you’ll usually be able to borrow more than if you applied for a mortgage on your own.

This is because lenders will consider the total combined income of you and the person you're applying with when assessing how much mortgage you can afford.

As a rule of thumb, a lender will typically lend you up to 4.5 times your annual income. If you earned £30,000 and were buying a property on your own, this would mean a potential mortgage of £135,000.

But if you bought with another person, whose annual income was also £30,000, this could double the amount you could borrow to £270,000.

While some lenders will allow up to four people to take out a joint mortgage, they'll generally only consider the two highest incomes when deciding how much to lend.

Find out how much you and a second applicant might be able to borrow using our how much can I borrow? Mortgage calculator.

Are joint mortgages different from standard mortgages?

Joint mortgages typically come with similar rates and fees to standard mortgages.

But with more than one person on the mortgage, you can combine your savings to pay a larger deposit and this will often enable you to access better mortgage rates.

Mortgage rates get cheaper as your deposit gets bigger, with every 5% of extra deposit generally unlocking lower rates. 

This means that a 75% ‘loan-to-value’ (LTV) mortgage, where you're borrowing 75% of the property price, will be cheaper than an 80% LTV mortgage.

For first-time buyers, using joint savings to move from a 95% mortgage to a 90% mortgage could get you a cheaper rate and save you thousands on your mortgage repayments.

Disadvantages of joint mortgages

If your co-owner stops making their share of the mortgage repayments, you’ll still be liable for them. 

You also need to consider what would happen if one of you wanted to move out or sell their share and the other didn’t – plus agree on how renovations, repairs, utility bills and other payments will be split between you.

Joint mortgages and credit scores

When you apply for a joint mortgage, the lender will look at the credit scores of everyone on the application. 

If your credit record is immaculate but your co-buyer's is poor, it will have an impact on the lender's decision.

Getting a mortgage with someone else will also affect your future credit score, as your report will probably show a financial association with the person you bought with. This means that if they have bad credit, lenders might be wary of you, too.

Similarly, missed mortgage payments will show up on your report regardless of whose fault it was that you missed them. 

Splitting up a joint mortgage

There are a number of reasons you may want to split up your joint mortgage. You might be going through a divorce or, if you bought with friends, you might want to move out to a home of your own.  

Whatever the reason, there are a few ways to bring your joint mortgage to an end:

  • Sell your home: you can use the proceeds of the sale to pay off the mortgage, although you may incur an early repayment charge if you're still in the introductory period of your mortgage (usually the first two to five years).
  • Transfer equity: this is the legal process of transferring the ownership of a jointly owned property to a single owner. It often involves one owner 'buying out' the other's share.
  • Continue paying the mortgage until it's cleared: sometimes, perhaps if a couple splits up but one person stays living in the property with the children, both parties continue paying the mortgage until the debt is cleared.

Should I get a joint mortgage with my parents?

Parents can often increase their children’s creditworthiness in the eyes of lenders by applying for a joint mortgage with them.

This makes both parent and child the co-owners of the property and is not a decision to be taken lightly. We’d only recommend this to parents who can comfortably afford this additional financial responsibility.

You must also be willing to treat your children as equals when making decisions about the property.

This could create additional costs. If you already own a property, you’ll be subject to the second home stamp duty surcharge of 3% when buying the new property.

You may also have a capital gains tax bill to pay when you sell. 

One way to avoid these financial penalties is to take out a 'joint borrower, sole proprietor' (JBSP) mortgage.

This involves both the parent and child sharing the mortgage (and responsibility for making repayments), but only the child being named on the property deeds.

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