First Time Buyer Joint Mortgage
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First Time Buyer Joint Mortgage
Charlie talks to us about First Time Buyer joint mortgages.
How do joint mortgages work for First Time Buyers?
Joint mortgages for First Time Buyers work the same way as other mortgages. You pay a deposit, then for the remaining amount you would get a joint mortgage.
On a joint mortgage you’ll be able to borrow more than by yourself. The lender will look at the combined income of both people. You can have a joint mortgage with a partner, or friends or relatives who either plan to live with you, or just want to help you buy a property and not live there.
My partner is a First Time Buyer, but I’m not. What are my options?
If you’ve had home ownership experience previously, you’ll lose your First Time Buyer eligibility. Some lenders offer specialised mortgages with slightly more favourable terms for First Time Buyers – which you wouldn’t qualify for.
However, if you have home ownership experience, it could be an advantage. You might have a bigger deposit than a typical First Time Buyer.
You also wouldn’t be eligible for stamp duty relief, so the normal stamp duty rules would apply.
Do both buyers have to be First Time Buyers? Do couples lose First Time Buyer status if one partner bought in the past?
Yes. Effectively, if one partner has previously owned a property, you will not qualify for the stamp duty relief and it would impact your overall costs when purchasing a property together.
Do I have to pay stamp duty if my partner is a First Time Buyer but I’m not?
If you buy a property with someone who is not a First Time Buyer, you will have to pay stamp duty. The stamp duty rules are complex and depend on what region of the UK you’re currently buying in, the price of the property, whether you’re a First Time Buyer and if it’s a second home.
The rules change so regularly that it’s probably not worthwhile going into more detail – check the government website for current information.
What does being joint tenants or tenants in common mean?
Joint tenants means that the people who own a property have equal rights over it. This is the usual approach for couples. If you choose to sell, the profits would be split equally between the owners.
With tenants in common, each person can own a different percentage of a property. Someone could own 60% and another 40%. This can be more common when purchasing with friends and family.
Once the legal phase of the transaction is underway, the solicitor would draw up a ‘deed of trust’. This effectively is a legal document that shows what percentage of the property each person owns.
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Can I get a mortgage with a guarantor?
Yes, this could be an option. With a guarantor mortgage, someone else is responsible for repaying the loan if you can’t.
A guarantor mortgage can help people onto the property ladder if you have, for example, bad credit, a small deposit, you’ve just started a new job or you’re struggling with affordability because you have low income.
Guarantors must get independent legal advice in order to complete the transaction. This must be confirmed in writing by an independent solicitor before you’re able to complete the mortgage.
How much can you borrow as a First Time Buyer with a joint mortgage and how much deposit do I need?
Lenders will go up to approximately 4.5 times the total income, and you would typically need a minimum of 5% deposit.
However, it is all based on your income and expenditure. They will take into account your credit commitments and monthly expenditure, and it can really vary based on this information.
It can be quite complicated, and so that’s where we as mortgage brokers can help. We’re able to work out what you can and can’t do from an affordability point of view.
What is a Joint Borrower Sole Proprietor mortgage?
A Joint Borrower Sole Proprietor mortgage is when you have two people on a mortgage and just one person on the mortgage deeds.
Basically it means you both share the responsibility for the mortgage repayments, but only the person on the mortgage deeds would own the property. These mortgages can be used for a relative to help with affordability.
Not all lenders are able to offer this kind of mortgage deal. It’s quite a niche market, so if this is something you’re looking to do, I suggest you speak to a broker to guide you in the right direction.
Can you transfer a joint mortgage to one person?
Yes, this can be achieved if you decide to take a joint mortgage on by yourself. But you would have to prove you can afford the mortgage based on your income alone, and it would be subject to the typical affordability criteria.
Typical circumstances might be that you’re splitting up with a partner and looking to take the mortgage on by yourself. I suggest you speak to a mortgage advisor – if this is something you want to do, we can review your options and see if it would be possible.
How do you calculate a First Time Buyer joint mortgage?
We calculate your maximum borrowings with various lenders. We’ll have an initial consultation with you, work out your income and expenditure and see what deposit you have, as putting down a larger deposit can sometimes mean you can borrow more with certain lenders.
How can a mortgage broker help me get a joint mortgage as a First Time Buyer?
A mortgage broker will give you a clearer picture of what you can and can’t borrow. Each lender takes a different view on all types of criteria and affordability, and we can guide you to the right lender that’s best suited to your circumstances.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Useful Links
- First Time Buyers
- First Time Buyer New Build Mortgage
- Self-Employed Mortgage First Time Buyer
- First Time Buyer Joint Mortgage
- Do I need a Guarantor?
- Joint Borrower Sole Proprietor Mortgage
- Agreement in Principle
- How Much Deposit Do You Need For A Mortgage?
- First Time Buyer Mortgage Bad Credit History
- Interest-Only Mortgage for First-Time Buyer credit history