Getting onto the property ladder is tough, most of the time you need a hefty deposit, a steady income and good credit. This is why you might want to consider getting a joint mortgage, grouping together means you’re more likely to afford a bigger property as it’ll increase how much you’re able to borrow.
Head of Mortgage at Sambla, Yasin Kayhan, has shared a list of things to consider before getting a joint mortgage.
1. Rent first
Joint ownership is a big decision and not one to be taken lightly. If you don’t already live with your partner, then we recommend renting together first to test the waters. Getting a mortgage of any sort is a long term commitment, with many first time buyers spreading the repayment cost over a minimum of 25 years.
2. Consider your reasons for joint ownership
Many people look at joint ownership as a realistic way to get onto the property ladder however it’s important not to rush into it. Buying a house is a big commitment so make time to sit down and discuss all possible outcomes, such as your monthly outgoings, life plans and what would happen if one of you wanted to sell and move out. This prevents a potentially sticky situation further down the line.
3. Speak to a mortgage adviser
It sounds simple but a lot of people forget that mortgage advisers are out there for them to talk to. They can offer you advice as well as inform you of the different mortgage rates available to you and your circumstance. Speaking to a mortgage advisor will also allow you to plan your budget accordingly, so you know exactly how much you have to play with each month.
There’s several ways you can go about finding a mortgage advisor. The most obvious is by searching online for local brokers and reading their reviews, but you can also ask your friends and family for their recommendations. Social media groups and forums are also great for advice; ask questions about specific businesses and see if anyone else has gotten advice from them before. This will give you an excellent idea into who to choose.
4. Check your own financial situation
Not everyone is going to be in a position to be accepted for a mortgage and sometimes it just comes down to being realistic. Don’t feel as if you have to get a mortgage just because your friends are getting one. You need to make sure that it’s the right financial decision for you.
Knowing when it is the right financial decision for you depends on the person. Take into account your savings and how much you’d need for a deposit, whilst sparing some for a rainy day. You should also consider your financial responsibilities, like children, pets or future plans that may require a hefty deposit.
5. Buy as tenants in common
Tenants in common allow each owner to have their share of the property. That person then has control of that share, meaning they can sell their share if they want to, as well as leaving it for someone in their will.
6. Sign a legal agreement before you buy
Usually when you’re looking to jointly purchase a property, you’d do it with someone you trust like a partner, friend or family member. However, even if you are doing it with them it is important to sign a legal agreement. A legal agreement would make sure that both parties own their share of the property, and can also separate funds such as deposit, giving you an added piece of mind.
7. Set up a joint bank account
When paying your monthly mortgage payments and other household bills, it’s a good idea to set up a joint bank account. Not only will this keep each of you accountable for your share, but it can also help you to budget by seeing clearly what you have left over in your own account each month.
8. Work out your joint house purchase budget for extra costs
Buying a house isn’t always plain sailing and there’s a chance that you could be hit with some unexpected costs. These may include repairs, or more commonly with new builds, delays, resulting in you having to stay in a rented property or hotel in the meantime.
9. Make a will
No one likes to think about death, but if the unexpected was to happen then it’s important to think about who you want your portion of the property to be handed over to. Not having a will may mean that it ends up in the hands of someone that you don’t want to have it. So get that written as soon as possible after or before the property purchase.