Beginning the journey of finding a property and obtaining a mortgage can be daunting for many homebuyers, particularly if they are going through the process on their own.
As a Mortgage Broker in Coventry, we have spoken to a number of First Time Buyers in Coventry who have decided to buy a property with a friend or partner if they are able to.
A part of the process will involve the advisor carrying out an affordability assessment in which they will ask you about your financial situation. This will give us an idea of the maximum mortgage amount. In the case where there is two applicants, lenders will factor in both of the applicants’ income. Due to two sources of income being on the mortgage, it can increase your chance of getting a mortgage offer.
In the event that you were to default, your co-borrower could also be responsible for the full mortgage, and vice versa.
Below is a list of helpful tips we advise you consider when moving into a property with a friend or partner.
This all goes down to which lender you are with, however, you will usually be able to co-borrow with up to four people jointly.
As much as having more people involved can work well with getting accepted, it’s best to keep in mind that this does increase your chance of someone pulling out before the term ends. Therefore, you need to be mindful of the people are choosing to buy a property with.
There is the option to increase your mortgage later if you want to, however, all parties need to agree to this. Keeping this in mind, it’s best to plan ahead for your future and your plans for the property.
Joint tenancy is an option that is more popular with civil partnerships or married couples. In the eyes of the law, joint tenants are two halves of one whole, one borrower. Therefore, in a tragic event where one half of the party passes away, the property would automatically be given to the other half.
In the circumstance, where you are looking to remortgage or sell the property, both of you would have agreed prior to proceeding with the mortgage.
A ‘Tenancy in Common’ can be an option if you and your co-borrower are friends or family. This means that you both own your part of the property.
You don’t need to split your shares equally either. Therefore, if you find that one of you is on a higher income, for example, one of you will own more of the property than the other.
One benefit of being a ‘Tenant in Common’ is that you can have the freedom to act independently so it’s your choice if you want to sell or give away your share.
A mortgage lender will stress that all borrowers are jointly and severally liable. Due to this, you will be responsible to keep up the payments if one person decides not to pay their part of the mortgage.
If you are looking to buy a home with your other, you never really expect that you’re going to split up before the term ends. It is a big financial commitment to make, let alone with someone else, and can be a difficult process if you want to make changes.
This can be even more challenging if children are involved because it is likely that one parent will stay with them whilst you are the one who will move out and possibly find your own mortgage. Regardless of whether you are staying or going, both parties will need the help of a Mortgage Advisor in Coventry.
Even if the person has been paying the mortgage with the input of their ex or not, this doesn’t change the fact that it was applied for in a joint name. This means that in the event of arrears, they will still chase both parties.
Prior to removing your ex-partner from a mortgage, the lender will need to be sure that you will be able to maintain mortgage payments by reassessing your income before they proceed.
It can be common for people to apply jointly for the second time with a friend, family member or new partner if they are will struggle to afford a mortgage on their own. In this circumstance, it can be beneficial to obtain Mortgage Advice in Coventry.
As mentioned, in the circumstance where you may end up divorcing or separating from your partner while on a mortgage, you are both still responsible for the property and its mortgage payments.
Firstly, you would need to get in touch with your lender if you were the one who wanted your name removed from your mortgage. You can’t just make an agreement between the two of you.
In the situation where you are looking to get a mortgage of your own, the lender would take into consideration the property you are currently tied to. Therefore, it’s important to make sure that you are removed from the previous mortgage.
Circumstances like these will require you to look at getting Mortgage Advice in Coventry.
You will find that some lenders will be more generous than other when it comes to how much they will be willing to lend you. This is something your allocated Mortgage Advisor in Coventry will factor this in when recommending the best mortgage lender for you to approach.