Traditionally, when thinking about joint mortgages, most people picture a married couple. Increasingly, however, friends or siblings are taking out joint mortgages when they buy their first home together.
A joint mortgage is the most popular way for first-time buyers (FTBs) to fund their home purchase, with more than six in ten opting for one1.
Buying with someone else means you can split the costs. Saving enough money to pay the deposit is one of the biggest hurdles for FTBs, with joint mortgages allowing buyers to share the burden. Likewise, monthly payments can be made together and your joint earnings will be used to determine how much you can borrow.
Joint or common?
A joint mortgage works the same way as a normal residential mortgage. Lenders usually allow groups of up to four people to apply for a joint mortgage. The big decision is whether to be joint tenants or tenants in common:
- Joint tenants essentially act like a single owner. You all have equal rights in the home, you split the profits equally when selling and, should one borrower die, the others will inherit their share.
- Tenants in common have separate interests in the whole property. This means that you can choose how to split the ownership, with one person, perhaps, paying a bigger deposit in return for a bigger share of the value when sold.
Do you trust each other?
Before applying for a joint mortgage with a group of friends, make sure you know the commitment you are taking on. For example, if one person is unable to keep up with payments, the others must cover the full amount.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.