Joint Mortgage With Parents
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Joint Mortgage With Parents
Jess Pearson explains how a joint mortgage with parents works.
Can I get a joint mortgage with my parents?
Yes, it’s possible to get a joint mortgage with your parents – and it’s quite common for parents to help get their children on the property ladder.
In a joint mortgage, both you and your parents would be named on the mortgage and on the property deeds – and you would be jointly responsible for the repayments. You’ll share the responsibility of the mortgage moving forwards.
Will I miss out on a First Time Buyer discount if I get a joint mortgage with my parents?
If your parents already own a property, you will likely miss out on the First Time Buyer stamp duty discount if you take out a joint mortgage with them.
However, there are certain types of joint mortgages, like Joint Borrower Sole Proprietor, where your parents can be on the mortgage without owning any part of the property. In that case, you would still be eligible for the stamp duty discount.
What’s the difference between joint tenants and tenants in common?
The main difference between joint tenants and tenants in common lies in how ownership is shared, and what happens upon death of a co-owner. Joint tenants own the property equally and together, meaning the share will automatically pass to the surviving tenant upon death.
Tenants in common each own a distinct and separate share, which can be equal or unequal. They can leave their share to their chosen beneficiaries in their will.
What deposit do you need for a joint mortgage with a parent? How much can I borrow for a joint mortgage with parents?
For a joint mortgage with parents, the minimum deposit requirement is typically the same as a standard mortgage, which is 5%. You would need to qualify for the 95% borrowing.
The maximum amount you can borrow depends on your combined income and affordability, with most lenders offering between 4.5 times and 5.5 times your joint annual income.
What eligibility criteria do we need to meet for a joint mortgage with my parents?
It’s much the same as any joint mortgage. You need to pass the credit check and your affordability needs to stack up – that’s based on your income versus your commitments, dependents, etc. But that’s it, there’s nothing specifically different whether you’re buying with a partner or your parents.
Does a joint mortgage with parents have to be 50-50?
When there’s more than one party involved, everyone on the mortgage application is jointly and severally liable. That means that it’s 100% of each party’s responsibility to make sure that the mortgage is paid.
However, the ownership share can be customised based on individual contributions, financial circumstances or any agreed arrangements. That’s where the different types of ownerships come in between tenants in common and joint tenants.
How will my parents’ ages impact our ability to get a joint mortgage? What’s the maximum age?
If your parents work, the maximum age is typically 70 or 75. Using retirement income, you can typically go up to the age of 80. If you’re restricted on the term due to your parents age, it could impact the maximum borrowing and also affect the monthly payments.
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Can my parents pay the full deposit and also be named on a joint mortgage? Would this be classed as a gifted deposit?
If your parents pay the full deposit and they’re also named on the joint mortgage, the deposit isn’t considered a gift.
A gifted deposit is when someone provides you the deposit money but doesn’t become an owner of the property. The gift is with no exception, repayments or ownership. That’s how it would qualify.
What happens if you have a joint mortgage with parents and they die?
If you have a joint mortgage with your parents and one of them dies, the surviving parent – or yourself, if you’re the only other joint owner – will inherit the property. That’s the case if it was held as joint tenants. The mortgage repayments become your sole responsibility.
If the property was held as tenants in common, the deceased parent’s share will be dealt with according to their Will. You may or may not inherit it. You’ll need to inform your mortgage lender about the death and provide them with the death certificate.
The surviving party would be liable for the full mortgage amount and the monthly payments. You may not have sufficient income for this, in which case the mortgage company could force the sale of the property to get the mortgage repaid.
Therefore, it’s really important to have appropriate life insurance to cover the mortgage. So if something happens to either parent or anybody you’re in a joint mortgage with, that policy could pay off the mortgage in full.
Is getting a joint mortgage with my parents a good idea? What are the advantages and disadvantages?
For some people it works and for others it doesn’t. The advantage is that you can probably get a mortgage even if you don’t have much income. Your parents could boost that for you massively.
They might be prepared to do it because they want to contribute a deposit while retaining ownership, or they could see it as an investment.
The main disadvantage is usually the age difference, as this brings in different challenges depending on how old each party is. This is true for everybody in a joint ownership situation.
You need to carefully consider your exit strategy and whether how you’ve set up the ownership of the property works for all parties.
How do I apply for a joint mortgage with parents? What’s the process?
It’s exactly the same as applying for any joint mortgage. We need all the usual paperwork such as ID, proof of address, proof of income and bank statements. Your broker will take you through the process step by step.
How can a mortgage broker help on a joint mortgage with parents?
A mortgage advisor can always be useful and that’s certainly the case here. It’s worth having a conversation with an advisor to check that the scenario is really the right way to achieve your goals – there may be other ways that it could work better.
Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
The Financial Conduct Authority does not regulate some forms of Buy to Let Mortgage.
There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £99 to £549, and this will be discussed and agreed with you at the earliest opportunity.
Asset Harbour Mortgage & Protection Ltd trading as Asset Harbour Mortgage & Protection are an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.
