4 Person Mortgage
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4 Person Mortgage
Charlie Connolly talks to us about a four-person mortgage.
Can I get a mortgage with four people? Can a house be owned by four people?
Yes, four person mortgages are very much possible. In fact, I have had a couple of these on my desk recently. Some lenders even consider all four incomes for affordability, which is a bonus.
Can you get a mortgage with friends?
Yes, you can borrow on a mortgage with friends. Some lenders may be a little restrictive and only lend to family members when four people are applying. However, other lenders will lend to a group of friends.
How do mortgages with four or more applicants work?
They work largely the same as other mortgages. Some lenders just allow you to borrow more, as they base the income on four incomes rather than one or two.
What deposit do you need? How much can you borrow with four people on a mortgage?
You would normally need a 5% deposit on a mortgage with four applicants. It’s the same as any other normal mortgage application.
You can normally borrow around 4.5 times your combined salaries, and some lenders allow you to use all four incomes at that 4.5 multiple. Obviously, if that’s the case, you’d be able to borrow a lot more than with two or even three incomes – so you can purchase a larger property.
What documents do you need with four people on the same mortgage?
Mortgage packaging requirements are typically the same with a four person application. You just need to provide the documents for four people, rather than two.
Typically, we need pay slips and bank statements if you’re employed. If you’re self-employed, we would need tax calculations and tax year overviews with business bank statements.
We would also need your ID – a passport or driving licence – and proof of address such as a council tax bill.
Does it cost to add someone to a mortgage?
To add someone onto the mortgage, there would usually be an additional cost. You would have to pay the solicitor a fee to complete what’s called a Transfer of Equity.
This costs around £400 and involves adding the additional person to the details held by the Land Registry.
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Do you pay stamp duty when adding someone to a mortgage? What other costs are involved?
If you add someone onto the mortgage, additional stamp duty costs are sometimes applicable. It ultimately depends on whether the person being added on is a homeowner already, and also how much equity is in the property.
A solicitor will be able to guide you on this at the legal stage and indicate whether stamp duty would be applicable. In terms of other costs, it would typically just be the Transfer of Equity, which we spoke about in the previous question.
What are the pros and cons of having four people on a mortgage?
The key benefit is the opportunity to consider four incomes towards affordability, which means you could purchase a more expensive property. All four people may have also contributed towards a deposit, which also helps boost your borrowing power.
One of the disadvantages is that not many lenders allow this, so there’s less choice. It could also become complex should one of the four people later want to come off the mortgage. The loan would then need to fit based on the remaining applicant’s income.
Which lenders offer mortgages to groups of four or more people?
There are a few lenders out there who are able to consider a four-person mortgage, but only a selection of those will consider all four incomes. Contact us here at Midas and we can guide you in the right direction.
How do I get a four person mortgage, or a multi-applicant mortgage as it’s otherwise known?
If you’re looking to proceed with a multi-applicant mortgage, I recommend speaking to a broker like ourselves. We will recommend an appropriate lender based on your circumstances – and also help you weigh up all the pros and cons to make sure a multi-application mortgage is right for you.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
For specialist tax advice, please refer to an accountant or tax specialist.