3 Person Mortgage

Does it cost to add someone to a mortgage?

Yes, it does cost to add someone to a mortgage. A solicitor will need to be instructed to add the extra person to the property’s title deeds, and that fee can vary depending on your lender and on the complexity of the legal work.

Also, there may be a Stamp Duty Land Tax liability on the amount that the newly added person pays the existing owners for their share. It’s prudent to seek tax advice for this.

What are the pros and cons of having three people on a mortgage?

The main advantage is a massive borrowing boost. Combining three salaries can turn an unaffordable house into a reality. You also need smaller individual deposits – splitting a 10% deposit three ways is much easier than doing it alone or as a couple.

You’ll also have lower running costs, because council tax, energy bills and repairs are shared – leaving everyone with more disposable income. As shared responsibilities, home maintenance and the mortgage don’t just rest on just one pair of shoulders.

The big downside is ‘joint and several liability’. If one friend loses their job, the other two are legally forced to pay the full mortgage. The bank won’t care who is short that month. There’s also the financial association to consider. Your credit files become linked, and if one person misses a bill payment, it can lower the credit scores of the other two.

You should also consider the complexity of leaving, because if one person decides to move out or buy with a partner, the remaining two must prove they can afford the entire mortgage between them to buy that person out.

Stamp Duty can also be a factor. If one person in the group has owned a property before, the entire group loses their first-time buyer tax relief and may have to pay more.

How can we get a multi-applicant mortgage? How can a mortgage broker help?

To get this type of mortgage, a mortgage broker is particularly valuable. We can research the lowest cost lenders that allow more than two applicants, and explore which lenders count all three incomes towards affordability.

Brokers also have access to lenders that don’t deal with the public directly, and only work with intermediaries like us. We can also coordinate a multi-applicant mortgage on your behalf, managing three sets of payslips, IDs and bank statements.

Key Takeaways

• Three or even four people can get a mortgage together, which is a common strategy to combine incomes and increase total borrowing power.
• A major downside is “joint and several liability,” meaning if one person is unable to pay, the other two are legally required to cover the full mortgage repayment, and missed payments can negatively link everyone’s credit files.
• The main advantages are a massive boost in affordability, smaller individual deposit requirements, and lower shared running costs like energy bills and repairs.
• The application process follows standard joint mortgage principles but requires three full sets of documents and legal paperwork to protect the separate financial interests of all applicants.
• A mortgage broker is particularly valuable for coordinating a multi-applicant mortgage, as they can identify lenders who permit more than two applicants and count all three incomes towards the total borrowing amount.