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First time buyer joint mortgages: your best option to buy?

Many first time buyers in the UK are banding together with friends, relatives or partners to get the mortgage they need.

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 14 April 2023

5 min read

First time buyer joint mortgages: your best option to buy?

Getting your foot on to the property ladder is becoming more and more difficult for first time buyers, and especially in the current economic climate. Cost of living, inflated house prices and ever increasing interest rates have all made it more difficult to make that step to become a homeowner for the first time.

Buying a home is a stressful experience for anyone, and especially for those who are going through this process for the very first time. In this section we’ll look at how first time buyer joint mortgages work and how they can help to make that first step less difficult for new borrowers.

How do joint mortgages work?

A joint mortgage is exactly what it sounds like. You apply for a mortgage with another person or people, rather than applying by yourself.

Mortgage lenders are very familiar with joint applications. People who are married or in a committed relationship often apply for their mortgage together, so they can each have a share in their home.

Applying for these mortgages work in the same way and will have the same lending criteria as with most other mortgages. You:

  • Save up a deposit for your home (most lenders prefer around 10% of the property value, but it is possible for first time buyers to get a mortgage with a 5% deposit with some lenders)
  • Decide key details like how many years you want to repay your mortgage over (mortgage term) and the type of mortgage needed (repayment or interest only)
  • Speak to an independent broker for advice (if needed)
  • Submit an application with a bank, building society or other lender

The main thing that is different with a first time buyer joint mortgage is that instead of assessing one person’s income, credit score/ credit history etc lenders can assess both. Most of the time having a combined income will allow you to borrow more, as lenders will be more confident you will be able to repay.

More key information about mortgages can be found in:

MPO – What is a mortgage?

MPO – How to find the right mortgage deals

Joint mortgages for first time buyers

Halifax have stated that more than 6 out of 10 first time buyers apply for a joint mortgage. It’s a popular choice and this makes sense as it can allow buyers to get on the property ladder far more quickly than buying alone.

The main benefit for first time buyer joint mortgages is the ability to split bills and expenses to save money. You can split costs like:

  • Mortgage fees (arrangement fees, conveyancing fees, valuation fees etc)
  • Mortgage broker fees
  • Products fees
  • Monthly mortgage payments
  • Household bills

If it’s the first time both of you are buying, you can even benefit from first time buyer schemes (mortgages with a 5% deposit) for extra savings.

First time buyers also currently don’t have to pay Stamp Duty Land Tax for properties under £300,000. First time buyers will only pay 5% Stamp Duty on properties costing between £300,000 – £500,000.

More info – MPO Stamp Duty Calculator

Can you get a joint mortgage with parents?

Don’t worry if you aren’t in a committed relationship right now and are keen to buy that home you have always dreamed of. Though it is very common for couples to apply for joint mortgages, you can also apply with family members if you wish.

If you have been struggling to work out how to get a mortgage, you could turn to the Bank of Mum and Dad for help. You can apply with one or both parents and all of your incomes will be assessed by the mortgage lender individually. This could give your application a much-needed boost on the way to being approved.

Can you get a joint mortgage with friends?

Though many people buy a home with a partner or family member, it is also possible to apply for a mortgage with a friend. This could be a good solution if you need more money for a deposit (combine resources) or you have found it hard to get approved on your own.

You can choose to apply for a mortgage with one or more of your friends – some lenders will allow up to 4 people on their mortgage applications. Lenders that will allow joint mortgage applications include:

Can you change mortgage from joint to single?

It’s possible to buy the other person out of a joint mortgage at a later point or have them removed from the mortgage deed. If you are the one who does not want the mortgage anymore, your options for getting out of a joint mortgage are:

  • Have the other person buy your share of the property from you
  • Have someone else take over your share of the mortgage
  • Sell the property and split the profits left (if any) after the mortgage is repaid

This is a situation that happens frequently due to things like separation or divorce. You can complete what is known as a transfer of equity, to sign over your share of the mortgage.

Do joint mortgages have to be a 50/50 split?

You can split a mortgage equally – but you don’t have to. Sometimes one person may put in more money for the deposit for example, and you might want this reflected in how much of the property you each own.

There are two main types of joint mortgage:

Tenants in common – You each own a % share in the property that adds up to 100% overall

Joint tenants – You are each classed as owning 100% of the property

If you wanted to each own a different share in the property, then tenants in common would be your best option. Tenants in common is usually what would be chosen when buying with friends or family members, allowing for a clear and easy split in costs and bills.

Note: If you’re not sure what type of joint mortgage is right for your situation, it could be worth speaking to an independent mortgage broker for advice.

Resources

Gov.uk – Stamp Duty Land Tax: transfer ownership of land or property

Gov.uk – Joint property ownership

Gov.uk – Jointly owned property trust: registration

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