Joint mortgages with 3 applicants
Getting a joint mortgage with 3 applicants is certainly possible but there are some considerations you may have to take into account. Getting an agreement in place before getting into a joint mortgge will avoid so many issues that tend to pop up later down the line.
Can more than two people apply for a mortgage?
Generally, mortgage lenders will look to cap the total number of people they are willing to give a mortgage to 2 but in some cases, they may grant a joint mortgage with 3 applicants.
The obvious benefits of getting a joint mortgage with 3 applicants are that you will be able to save a bigger mortgage depositmush faster and be able to get on the property ladder much quicker.
You may also be able to borrow more by putting your incomes together when seeking a joint mortgage with 3 applicants.
When going through the mortgage lenders affordability assessments to see if you can afford to make the monthly mortgage repayments on a joint mortgage with 3 applicants, your combined income will very likely be enough to afford the mortgage.
Some mortgage lenders will insist that the joint mortgage applicants know each other and that they all have the home as their main residence.
When getting a joint mortgage with 3 applicants you may want to consider the legal structure of your arrangement and seek independent legal advice. A tenants in common arrangement may be more favourable if you want to own unequal shares of the property in line with the amount of mortgage deposit you may have put in etc. This will also allow you to pass the home on to your benefactors through your will if you die.
You may also want to consider a declaration of trust and cohabitation agreement.
Things you may want to be defined in any agreement include:
- What happens if someone dies?
- Who pays the monthly mortgage or how is it split?
- What happens if someone wants to sell? How is the minimum price agreed? how are proceeds split?
- How are cohabited spaces shared?
How do mortgage lenders assess eligibility for a joint mortgage with 3 applicants?
Mortgage lenders will usually assess your mortgage affordability by looking at the mortgage multiples they have for their joint mortgage products and adding up all your income to see what the maximum you may be able to borrow on a joint mortgage with 3 applicants could be.
If the mortgage you want to borrow is within your mortgage affordability then you may find that the mortgage lender is more willing to lend to you and may then proceed to offer you a mortgage in principle.
The mortgage lender will also access your mortgage affordability for a joint mortgage with 3 applicants on your credit scores and history. If your credit scores and histories are low then you may find it harder to get a mortgage.
This could be the case even if it is just one out of three of you who has bad credit issues. The mortgage lender may reduce their loan to value on the joint mortgage with 3 applicants or increase the mortgage rate in order to adjust its risk.
How much can you borrow on a joint mortgage?
The amount you will be able to borrow on a joint mortgage with 3 applicants will depend on the mortgage multiple the mortgage lender uses.
Can you get a joint mortgage if you have bad credit?
Bad credit can make it much harder to get a joint mortgage with 3 applicants as the mortgage lender may increase restrictions on the mortgage to reduce their exposure.
If it was a CCJ which was satisfied and is a certain age then some mortgage lenders may be willing to lend. Other mortgage lenders may lend if the CCJ was a maximum amount.
When looking to get a mortgage with bad credit the requirements from different mortgage lenders will differ and a bad credit mortgage broker may be able to assist you in getting a joint mortgage with 3 applicants.
Bad credit could include:
A debt management plan
A home repossession
Alternatives to getting a joint mortgage with 3 applicants
There are several alternatives t getting a joint mortgage with 3 applicants which you may want to consider.
You may be able to use a guarantor mortgage and get a 100% loan to value mortgage as long as your guarantor is able to guarantee 75% of the mortgage. This means if you default on the mortgage repayments then your guarantor will be liable for the mortgage and could end up losing their assets.
Use a Government scheme
Government schemes help you reduce the amount of mortgage deposit you may need to put down, reduce the price of the property or create a structure that increases your mortgage affordability much sooner than it would have been.
Some of these include first-time buyer government schemes whilst others in this list are accessible to you even if you are not a first-time buyer.
Government schemes are not available to you if you are getting a buy to let mortgage.
The Government schemes include:
- 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.
A family deposit mortgage
A family deposit mortgage is a type of mortgage where the mortgage lender offers a 100% or 95% loan to value mortgage when a family member puts down a mortgage deposit in a savings account for a fixed period.
This could be an alternative to getting a joint mortgage with 3 applicants. Family deposit mortgages are also known as family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the Lloyds lend a hand mortgage or the post office family link mortgage.
Get a gift from your family.
Aside from the family springboard mortgages your family members or friends could also simply gift you a mortgage deposit but not all mortgage lenders are keen on lending to borrowers who have been gifted their mortgage deposit and the ones who accept this may insists in a gifted deposit letter which ensures that the gift is indeed a gift and not a loan which may have some claim on the first charge mortgage if the mortgage lender ever had to repossess the property.
Getting a gift from your family may be a suitable alternative to getting a joint mortgage with 3 applicants.
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.
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.