Even though there have been wage increases over the years, property inflation has had an effect on First Time Buyers in Lincoln affording current property prices. As a countermeasure, applicants may have the option of buying with someone else, if it is appropriate to do so. Lenders can take into account the two incomes when calculating your maximum mortgage amount, which may increase your chances of being offered a mortgage.
Even though it’s beneficial because you have someone to share costs with, it’s not as straightforward as you think. You can’t just move in with your partner, friend, or family member that easily.
Below are some questions that we get asked regularly as a Mortgage Broker in Lincoln, when it comes to applicants looking to move into a property with someone else:
Lenders are known to allow up to four people to jointly co-own a property. You have to remember that the more people that co-own a property, the likelihood of someone backing out can increase. In the case where one of the borrowers drops out of contributing towards mortgage payments, any joint owners will have a legal right to remain inside the property, except if a court rules otherwise. This is why you need to be sure about who you are buying with.
There is an option to increase your mortgage at a later date if you prefer, however, all borrowers will need to agree. Therefore, you need to think about your future as well as establish how long you are looking to stay within the property.
Joint tenancy is an option we commonly see married couples or applicants go for. This means that in the unfortunate case where either applicant passes away, the property’s ownership would pass on to the other owner.
In the future, if you decide to remortgage or sell the property, both parties need to agree to the decisions before you proceed with anything.
If the applicants are relatives or friends that have bought together, ‘Tenants in Common’ is a potential option to go for. This is when you both equally own the property, however, you aren’t obliged to do so in shares. This circumstance can occur when one party is making a larger financial input than the other. If you are a ‘Tenant in Common’, you can act independently. For instance, you are allowed to sell or give away your share of the property to someone else.
It’s required that all borrowers meet their mortgage payment when they sign on for a joint mortgage. In the case where one party decides to stop paying, the other individuals on the joint mortgage will have to pay in order to make up the shortfall and prevent the mortgage from falling into arrears. These arrears can become a risk of you not getting another mortgage in the future.
The best way to think of it is that you don’t own 50% of the property, you own 100% jointly.
It can be a challenge to remove a person from a mortgage. Lenders will need to know that you will be able to afford mortgage payments on your own before allowing you to remove a name. As you can see, making changes to a huge financial commitment at a later date is not as simple as it sounds.
Furthermore, proving to your lender that you have been consistent with your payments since your ex has moved out doesn’t always mean that they will agree to your request to put the mortgage into your sole name. Lenders prefer having multiple incomes on the mortgage to reduce the chances of arrears.
As well as this, lenders will carry out an affordability assessment before anything is allowed to go ahead. This is where they assess your personal and financial situation to decide if you will be able to maintain your payments. This assessment is also done at the point of purchase.
Get in touch with a mortgage advisor in Lincoln if your request is declined by your lender, as they may be able to help. As a mortgage broker in Lincoln, we will work hard to find you a lender that will suit your circumstances. In some cases, seeking Specialist Mortgage Advice in Lincoln could be very beneficial, especially in complex situations.
Talking to a family member to see if they can support and help you out might be a good idea. They could help by taking your ex’s place with your mortgage or gifting you a lump sum to reduce the amount owed.
In the instance where you and your partner split up and you are the person to leave the property, it’s still your responsibility to pay your part of the mortgage despite you and your ex agreeing that they will make the payments.
Removing your name off a mortgage is just like removing an ex off a mortgage. Therefore, your name can be removed only if the lender can be sure that your ex can afford the payments on their own. Again, they will perform an affordability assessment to check this.
You need to watch your credit report if you are sending your partner money each month. This ensures they are paying the mortgage as the risk of the payment defaulting could affect your score.
If you plan on moving home into another property and need a new mortgage, but you are still tied into the joint mortgage, your commitments will be taken into account. This means that lenders may unfortunately not lend as much as you would prefer.
People’s circumstances change all the time, which is why buying a property with anyone is always a risk. That’s why it’s good to keep an open mind when entering the home buying world by accepting that things may change unexpectedly, but understanding there is usually a way to work around them. Get mortgage advice in Lincoln if you are in a difficult situation with your joint mortgage.