Joint Mortgage With Friend

Can I have a joint mortgage with a friend? How does this work?

Absolutely, you can. Lenders will generally allow up to four people to be named on a joint mortgage, although each lender may have slightly different rules.

When you and a friend take out a joint mortgage, you’re both legally responsible for making the monthly payments, and you both have a share in owning the property. It’s important to remember if one person can’t pay, the other has full responsibility for payment.

What deposit do you need for a joint mortgage with a friend? How much can I borrow?

You’ll normally need a minimum deposit of 5% of the property value. It’s no different to any other 95% mortgage. However, the more you can put down, the better your chances of getting a lower interest rate.

To calculate how much you can borrow, lenders typically will look at all applicants’ income and debts on a combined basis, which hopefully means you qualify for a larger loan. That’s generally why people club together in these situations.

What eligibility criteria will I need to meet for a joint mortgage with a friend?

There aren’t any special rules just because you’re buying with a friend. It’s just about meeting the lender’s standard criteria. Your affordability needs to stack up for the amount of loan you want, with your credit scores in good order, the loan being affordable, and legal residency status in the UK.

As long as all parties qualify under the lender’s criteria there’s generally no issue in applying together on a joint mortgage.

Does a joint mortgage have to be split 50-50?

Not at all. While splitting ownership 50-50 is very common, you can actually divide it however you agree. So it could be a 60-40 or a 70-30 split – whatever suits your particular circumstances.

Perhaps one of the applicants is putting in a bigger deposit or earning more, in which case you may choose unequal shares. In that case, the property is usually owned on what’s called a Tenants in Common basis, which means the shares are clearly defined in a legal document called a Deed of Trust.

It’s a good idea to have a solicitor help draw this up properly so that obviously everything is done as it should be.

Can one person sell a house with a joint mortgage?

No, not without the other person’s consent. Both parties are named on the mortgage and the property and so any decision to sell has to be made jointly. The only exceptions are legal interventions, such as a court order, but thankfully these are rare and hopefully a last resort.

If you’re buying together, you need to be mindful that you need to make decisions together on selling the property.

Can you get a joint Buy to Let mortgage with a friend?

Absolutely. The process is similar to buying a home to live in. Lenders usually allow up to potentially four people to apply for a Buy to Let mortgage.

However, there may be additional requirements, possibly higher deposits or proof that the rental income covers the mortgage payment. It’s worth getting tailored advice.

How does remortgaging a joint mortgage with a friend work?

It’s very similar to the typical mortgage process. If you’re looking to buy your friend out, that would be called a Transfer of Equity.

It’ll mean applying for a new mortgage in your name only – or with a new co-owner. The lenders will assess affordability and solicitors will need to update the Land Registry. If you’re just looking for a straight remortgage for a better deal, the application process would be no different from the original application.

You could also do a product transfer with your existing lender, if they’re offering competitive rates. They make the process nice and simple so you don’t have to do a full remortgage.

What is the maximum age for a joint mortgage with a friend?

Most lenders will want the mortgage to be fully repaid before the oldest borrower turns 70 – or in some cases 75. On occasion, some lenders can be more flexible. There’s no fixed age limit for applying, but the affordability of the loan will dictate the term.