Joint Mortgage With Parents

Can I get a joint mortgage with my parents? How does this work?

Yes, you can. The first way to buy a property with parents is with a traditional joint mortgage. You and your parents apply for a mortgage together and are all listed as joint owners. The lender, as part of the process, will look at everyone’s combined income, liabilities and financial commitments to decide how much you can borrow.

The second means of buying a property with your parents would be a Joint Borrower Sole Proprietor mortgage, often referred to as a JBSP mortgage. With this type of setup, parents can help with the mortgage but aren’t listed as owners of the property.

Their income and liabilities are taken into account for the borrowing calculations, but importantly, they don’t appear on the title deeds. It’s a great option if parents want to support a mortgage application financially without taking on legal ownership or responsibility.

Will I miss out on a First Time Buyer discount if I get a joint mortgage with my parents?

Potentially, yes. If your parents already own a property and you buy together as joint owners, you may lose out on First Time Buyer perks like stamp duty relief.

But if you use the Joint Borrower Sole Proprietor model, you should still qualify as a First Time Buyer since only your name will be on the property deeds. This means you can still potentially claim those valuable discounts.

What’s the difference between Joint Tenants and Tenants in Common?

This is all about how ownership works and what happens if an individual passes away. On a Joint Tenant basis, all parties own the whole property together. If one of the mortgagees or applicants dies, their share will automatically pass to the other parties – there’s no Will needed in that situation.

If you’re Tenants in Common, you may each own specific shares of the property – and those could be differing percentages. Crucially, they pass on according to a Will. That will dictate where the equity or the part-ownership of the property goes, rather than it transferring automatically to the other owner.

That’s an important legal distinction, especially if you’re contributing different amounts or have separate financial goals. You need to think carefully and take legal advice on this.

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

Somebody buying a property in this manner will need at least 5% of the property’s value as a deposit. Putting down more can help you get a better mortgage deal, such as a lower interest rate. But 5% is the minimum.

As for borrowing, lenders will assess the combined income, liabilities and debts of all parties, including the parents. By combining your incomes, you can usually borrow more than on your own. That potentially puts a more expensive property within reach.

What eligibility criteria do we need to meet for a joint mortgage with my parents?

There aren’t any specific rules just because you’re buying with parents, which is good news. But you both need to meet the lender’s usual requirements around credit scores, income, affordability for the loan and UK residency.

If all parties meet the criteria, you can generally apply together without any problems.

Does a joint mortgage with parents have to be 50-50?

Not necessarily. While the mortgage liability is usually joint and equal, especially if you’re set up as Joint Tenants, you can still agree on different ownership percentages.

If you choose Tenants in Common, you can legally define who owns what percentage of the property, i.e. 60-40, 70-30. This is done with a Deed of Trust, which sets out each person’s share clearly and legally.

How will my parents’ age impact our ability to get a mortgage? What’s the maximum age?

Age does play a role. Most lenders will prefer the mortgage to be repaid by the time the oldest borrower reaches either 70 or 75. Certain lenders may give you a little more flexibility.

The primary concern from lenders’ point of view is whether the mortgage is affordable and can be repaid within the specific timeframe. If your parents are older, you may need to look at lenders with more generous age limits or consider shorter mortgage terms.