Taking the initial step onto the property ladder can be quite an intimidating process for some home buyers, especially if you’re looking to purchase a property by yourself.
To counteract this, we regularly hear from lots of First Time Buyers in Essex that are instead looking to buy a property with a friend or partner if they can do so.
When we look to calculate your maximum mortgage amount, lenders will factor in both your income and your co-borrowers’. Having two applicants means you’ll be splitting mortgage costs between you both, which can help increase your chances of getting offered.
It is very important to remember that if you were to default, your co-borrower could also be responsible for the full mortgage, and vice versa.
As an open and honest First Time Buyer Mortgage Broker in Essex, we have put together a collection of handy things we recommend to bear in mind when moving into a property with a friend or partner.
Depending on the lender that you go with, you may be able to co-borrow with up to four people jointly.
It’s important to factor in though that the more you have involved, the higher the chance of someone pulling out before the term ends. You should always be careful with whom you choose to buy a property with.
You may be able to increase your mortgage later if you prefer, though you and your co-borrowers will all have to agree. With that in mind, plan ahead for your future and your plans for the property.
Joint tenancies tend to be something that is more favoured by civil partnerships or married couples. If one half of the party were to die, the property would be immediately given to the other half. The way the law sees it, is that joint tenants are two halves of one whole, one borrower.
If either of you were looking to remortgage or sell the property, both of you would have to agree before proceeding with the mortgage.
Alternatively, if you and your co-borrower are friends or family, then it is a lot more likely that you will go down the route of ‘Tenancy in Common’. In this case, you both own your own part of the property.
You aren’t required to split your shares equally either. This means that if one of you are making a more significant financial investment than the other, you will own more of the property than the other.
Another reason that this works out well if you are a ‘Tenant in Common’, is that you have the freedom to act independently. What this means is that if you wish to sell or give away your share
A mortgage lender will make it clear that all borrowers are jointly and severally liable. If one of your co-borrowers decides not to pay their part of the mortgage, you will be responsible for keeping up the payments.
When you look to buy a home with your then other half, you never really predict that you’re going to split up before the term is up. After all, it is a large financial commitment to make anyway, let alone with someone else, and making any changes to it is not an easy process.
It is even more complicated when you factor in children, as it is likely that one parent will stay with them whilst you are left to move out and possibly find your own mortgage. In this case, whether you are the one staying or going, both parties will require the assistance of a mortgage advisor in Essex.
Whether the person has been paying the mortgage with the input of their ex or not, unfortunately doesn’t change the fact that it was applied for in a joint name. In the event of arrears, they will still chase both parties.
Before you can remove your ex-partner from a mortgage, the lender will need complete confidence in your ability to maintain mortgage payments and will reassess your income to make sure that this is the case, before they will proceed.
We regularly find that in the case of being unable to afford a mortgage alone, the mortgage applicant will instead apply jointly once again with a friend, family member or new partner. Mortgage advice in Essex is definitely recommended in these situations.
As touched upon above, in the event of potentially divorcing or separating your partner whilst on a mortgage, you are both still jointly liable for the property and its mortgage payments.
In this case, if you were the one leave and wanted to remove your own name from their mortgage, you couldn’t just make an agreement between the two of you, they would need to get in touch with their lender.
If you were looking to get a mortgage of your own, the lender would take into consideration the property you are currently tied to, therefore it’s important to make sure that you are removed off the previous mortgage.
You should always take out mortgage advice in Essex when faced with circumstances like these.
Some lenders will be more generous than other lenders, when it comes to how much they will be willing to lend you. Your dedicated mortgage advisor in Essex will take this into account when recommending the best mortgage lender for you to approach.