Here at Yorkmoneyman, we understand that getting onto the property ladder for the first time can be a daunting process for many, in particular, when you’re planning to purchase a property by yourself. Through our experience in dealing with First Time Buyers in York, we find a number of them look to buy a property with a friend or partner if it is appropriate to do so. This is because having two applicants can result in increasing the likelihood of being offered a mortgage as the costs will be split between the two of you.
When it comes to working out your maximum mortgage amounts, lenders will take into account the two incomes. It’s important to understand that if one defaults, the other could also be responsible for the full mortgage. Below we are going to talk about a few points we recommend as a Mortgage Broker in York to be aware of when moving into a property with someone else:
Many lenders will allow a maximum amount of four people to co-own a property. This might sound appealing to some as you will be paying a lot less towards the mortgage, however, there is a higher risk of someone backing out. This is why you need to be careful when choosing who you are purchasing a property with.
You may consider increasing your mortgage further down the line, however, all borrowers will need to agree. From this, it’s important to consider your future and establish the duration you are looking to stay within the property.
This option is commonly popular with civil partnerships or married couples. In the unfortunate event of one of you passing away, then the property will automatically be passed to the other owner. The law treats joint tenants act like one. Because of this, joint tenancy can be favoured amongst married couples or applicants.
In instances where you are looking to remortgage or sell the property, both parties need to agree to the decisions prior to proceeding with anything. ‘Tenants in Common’ can be a potential option to choose if you are sharing with a friend or relative. This option is where you both equally own the property.
You aren’t obliged to do so in shares. This is where one party makes a more significant financial input than the other. As a ‘Tenant in Common’, you can act of your own volition. For example, you do have the right to sell or give away your share of the property to another person.
In the case where one of you fails to pay their share of the mortgage, the other(s) will have to contribute to the shortfall in order to pay the full amount. From the start, a mortgage lender will state that all borrowers are mutually and severally liable.
When you buy a house with a partner it isn’t with the intention of splitting up in the future. It’s a big financial commitment, therefore, any potential changes you want to make in the future can often become a complex situation.
In the circumstance where children are involved, only one person will be staying in the home. There might be a point in time when that person would like to manage the mortgage on their own so will need to seek expert Mortgage Advice in York.
Regardless of whether you have been paying the mortgage without the assistance of your ex, this doesn’t change the point of the application being processed in joint names. Therefore, in the case of mortgage arrears, both of you will be responsible despite only one person keeping up with the payments.
Prior to removing a party from a mortgage, the lender will need to be sure that the remaining applicant can keep up the affordability on their own going forward which will then lead to a full assessment of income. This will still be carried out regardless of whether you have kept up mortgage payments in the past or not.
In some cases, someone can step in to replace the ex-partner such as a family member or a new partner. Through this change, an expert Mortgage Advisor in York is able to help you with this change.
Remember, all parties remain responsible for any joint financial commitment, even in the case of a separation/divorce. This is regardless of whether a person leaves the family home and even if both parties come to an agreement that one person will make up the payments.
In terms of purchasing a new property, the mortgage payments on the old property will be accounted for. This means that it’s key that a person should get Mortgage Advice in York before making an offer if you are in this situation. When it comes to the amount you could borrow does depend on how generous the lender is. Here at Yorkmoneyman, we will keep this in mind when recommending the most appropriate lender to apply for a Mortgage Agreement in Principle with.