Multi-Applicant Mortgage

How is ownership split?

Ownership can be split in a few ways. If the property is split as joint tenants, the property is owned equally and you all have equal rights to the property.

You could also choose tenants in common, where two or more people own a distinct share of the property. For example, if it was a multi-person mortgage with four people you could all own different shares in the property. Applicant one could have a 40% share, and applicants two, three and four could each have 20%.

How much can you borrow for a multi-applicant mortgage?

Typically at the moment, maximum borrowing is around 4.5 times income. However, some lenders will stretch to five times income if certain criteria is met.

Most lenders will just use the income from the two highest earners on the application. However, certain lenders would consider a third person’s income and maybe even a fourth towards affordability, which obviously would stretch your maximum borrowing.

What are the benefits of a multi-applicant mortgage? What are the risks?

The advantage is that you may be able to borrow more money by combining income, which could result in you purchasing a more expensive property – if that’s what you wish to do.

If multiple people are saving up, it could result in a larger deposit, which could lead to a better interest rate. It could mean you’re able to get on the ladder faster, especially for First Time Buyers. A multiple person mortgage can open the door to home ownership sooner.

In terms of risks, the mortgage is a joint liability, so all applicants are equally responsible for paying it, even if one person can’t at at any point. It’s probably more complex, as more borrowers could mean more complications. Changes in circumstances like jobs, children or breakups could make the situation complicated in the future.

Any problems could have an impact on you – it could have credit implications. Your credit record could be affected by your co-owners’ financial behaviour. If they’re not contributing towards a mortgage, it could impact your credit score.

Also, there could potentially be selling difficulties. A decision about selling needs everyone to agree, which could cause issues.

Are there any alternative options to a multi-applicant mortgage?

If you’re looking to take out a mortgage with relatives, there could be some other options such as a Joint Borrower Sole Proprietor mortgage. This allows parents and other family members to contribute to the mortgage without actually legally owning the property.

How can a mortgage broker help? Is there anything to add?

While it does sound tempting to look into multi-applicant mortgages and buying a big house with your friends, do consider as a group the pros and cons. Make sure it will be the right solution for all of you. I think it’s important to seek advice from a broker under these circumstances.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.