Joint mortgage paid by one person (Considerations)
In this brief guide, we are going to discuss having a joint mortgage paid by one person and the implications of this.
What is a joint mortgage?
A joint mortgage is one where you are both equally liable for the mortgage. This means if the mortgage goes into areas ora default, the mortgage lender will chase both of the people listed on the joint mortgages for the full balance of the mortgage until they recoup what is owed.
Can a joint mortgage be paid by one person?
Yes, a joint mortgage can be paid by one person. The mortgage lender will not make any demands or requirements as to who should pay the mortgage but will only state that both parties are jointly liable for the mortgage balance.
Joint mortgages being paid by one person are maybe more common than we know. When a father or mother helps their child to get a mortgage they become joint owners of the mortgage and property although in most cases the mortgage will be paid by one person.
This could be the child or the parent.
What if one partner wants to leave the joint mortgage
If one partner wants to leave the joint mortgage and cause for the joint mortgage to be paid by one person then the mortgage lender will need to approve the remaining party as being able to afford the mortgage on their own.
The remaining party will need to pass the mortgage affordability checks of the mortgage lender as they did in the past but the lender’s criteria may have changed since then and the remaining party may find it harder to qualify as the sole borrower on the mortgage.
If this is the case, then the mortgage lender will not allow the party who wants to leave to remove their name from the mortgage and they will remain severely liable for the mortgage.
There are some mortgage lenders who will allow the other party to remove their name from the homes title deeds which will make the mortgage a joint borrower sole proprietor mortgage.
Whilst this may allow the other party to reduce potential stamp duty obligations and still be able to use some of the Government schemes listed below, almost every mortgage lender will still take into account the fact that this party still has a mortgage which they are liable for, regardless of if they are currently paying for it or not.
Government schemes which a joint mortgage sole proprietor relationship could open for the departing party include:
To get a mortgage these are the government schemes which may enable you to get a mortgage. You can check if you are eligible for these government schemes by using a government scheme eligibility calculator.
- Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy– allows you to buy your home at a discount price.
- Preserved right to buy– same as above.
- Right to acquire– similar to the above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
What are the implications of a joint mortgage paid by one person?
The implications of a joint mortgage being paid by one person are that the none paying party is still building their equity in the property whilst not paying for the mortgage balance.
In some cases, a joint mortgage may be paid by one person up to a certain point due to the fact that the non-paying person contributed the mortgage deposit.
Regardless of what internal dynamics there are, it is always important to have something in writing.
Imagine you get a joint mortgage but then the other party decides to not pay their share of the monthly mortgage repayment, you will still have to make the monthly mortgage repayments in full as if you don’t then you could potentially:
- Have a missed payment recorded on your credit file
- Have a mortgage default recorded on your credit file
- Lose the property through a home repossession
- Incur a CCJ through the courts
- Become bankrupt
Before getting into a joint mortgage you may want to consider seeking independent legal advice to fully understand your potential liabilities.
Looking to get a joint mortgage paid by one person? Use a mortgage broker
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
FAQs: Joint mortgage paid by one person
We answer some of the most frequently asked questions about a joint mortgage being paid by one person.
Can I transfer a joint mortgage to one person?
Yes, you can transfer a joint mortgage to one person, this is known as a transfer of equity. For you to do this, both parties will need to be in agreement and the mortgage lender will need to have taken the remaining party through its mortgage affordability checks.
A transfer of equity could take as much as 4 weeks to complete.
Do I have to pay the mortgage if I leave my wife?
If you have a joint mortgage with your wife then you will have to still keep paying the mortgage as you will remain jointly liable of the mortgage until a transfer of equity has taken place or the mortgage balance has been paid off in full.
Can a jointly owned property be sold by one owner?
Yes, a jointly owned property can be sold by one owner but it will need the consent of the other party before a sale can be finalised.
Can I have my name taken off a joint mortgage?
Yes, you can have your name taken off a joint mortgage but it will need to be through a process known as a transfer of equity.
You will need to transfer your equity to the remaining party in the joint mortgage.
For this to happen, the mortgage lender will need to be satisfied that the remaining party to the mortgage can afford to repay the monthly mortgage repayments in full.
Can you remove someone’s name from a mortgage without refinancing?
Yes, you can remove someone’s name from a mortgage without refinancing, this can be done through a process known as a transfer of equity.
In this brief guide, we discussed having a joint mortgage paid by one person and the implications of this.
If you have any questions or comments please let us know.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.