In a lot of cases for First-Time Buyers in Birmingham, being able to afford the funds for a home can be difficult, unless you’re buying with another person. The reason for this is because there are then two incomes for Lenders to take account of when calculating your maximum amount of mortgage you can borrow.
At this point, you then have someone to share the costs. There are risks to consider with this type of mortgage, ones to be aware of. Below we have put together some information about this type of mortgage.
Sometimes you’ll find that there are lenders who will allow up to four people jointly to co-own a property. In the event of one borrower stopping their contributions to mortgage payments, any joint owners have a legal right to remain living in their home unless a court rules otherwise. With this in mind, you need to be very careful about who you pick to co-own a home with you.
If you want to increase the mortgage at a later date, it’s important that all parties involved agree to this. It’s essential therefore that you make long term plans about what might happen down the line, future proofing yourself in the vent that you should end up wanting different things.
Most couples who are married or are in civil partnerships tend to choose to go with Joint tenancy. If either applicant were to die, then the property ownership would be passed onto the other person on the mortgage. If you have taken out mortgage life insurance, at that point you’d also see the mortgage repaid.
You will need the consent of the other applicant if at any point you wish to sell or remortgage the property in the future.
Tenants in common is another route that we see from time to time. This is an option chosen by relatives or friends that are looking to buy a property together. You will still both own the property jointly, but you cannot get forced to do so in equal shares. In any case, this works well if one party is financially contributing more to the mortgage than the other person.
You can act alone if you are a tenant in common, not needing to rely on the other person for consent. For example, you are completely able to sell or give away your share of the property to someone else, should you decide it’s not for you.
All mortgage borrowers are jointly and individually responsible for mortgage payments. If one of the parties stops paying, then the other party involved will have to cover any of the payments unpaid in order to prevent the mortgage from falling into arrears. Arrears on a mortgage may stop you from getting another mortgage at any point down the line.
Think of it all like this: you don’t own 50% of a property, you own 100% between you as a collective.
Removing someone from a mortgage can be a stressful and complex process. Lenders need to have the utmost confidence that you are able to maintain the monthly mortgage repayments, before they will allow you to take on a mortgage by yourself.
No one who buys a home with a partner does so intending for the relationship to go wrong and to end up with mortgage hurdles. A mortgage is a huge, life-changing financial commitment, and making changes to it at a later date is not always easy.
It’s also worth noting that even if you can demonstrate that you have been able to maintain mortgage payments since your ex moved out, there is no guarantee that a Lender will agree to your request to have your mortgage only be in your own name. Lenders like to know that there are two people to pursue in the event of any potential arrears. To remove someone, they will have to essentially start again, carrying out a brand new affordability assessment, much like they would’ve done at the start of the process.
If the Lender declined your request for a sole name mortgage, you should contact a Specialist Mortgage Advisor to see if there are any other Lender options out there that might be available to help you achieve what you’re looking to do.
It can be worth talking to family members to see if they have the ability to potentially help you out. This can be achieved by replacing your ex on your mortgage or by gifting you a lump sum to reduce the amount you owe the lender.
If you and your partner split up and you leave the family home, then you are still completely responsible for the repayments, whether you live there or not. Even if you agree with your ex that they will make all the payments, you’re still liable.
If you are sending your partner money each month, you should keep an eye on your credit report to make sure that they are still paying off the mortgage that you both owe. If they default, then your credit score will be affected by this.
If you find yourself still connected to an old mortgage, then any payments or lack thereof will be taken into account if at any point you decide you want to buy a new home of your own. Because of this, a Lender might not necessarily lend you as much as you’d want for that property.
Buying a home with anyone poses a risk to you and your credit score, so you need to go into it completely aware of what can and can’t be done, as well as what to do if you find yourself in a complex situation. It’s always better to agree what would happen to the house in the event of a disagreement, ahead of time, to hopefully avoid situations like the ones mentioned above.