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Joint mortgages for FTBs
Traditionally, when thinking about joint mortgages, most people picture a married couple. Increasingly, however, friends or siblings are taking out joint mortgages when they buy their first home together.
Stronger together
A joint mortgage is the most popular way for first-time buyers (FTBs) to fund their home purchase, with more than six in ten opting for one1.
Buying with someone else means you can split the costs. Saving enough money to pay the deposit is one of the biggest hurdles for FTBs, with joint mortgages allowing buyers to share the burden. Likewise, monthly payments can be made together and your joint earnings will be used to determine how much you can borrow.
Joint or common?
A joint mortgage works the same way as a normal residential mortgage. Lenders usually allow groups of up to four people to apply for a joint mortgage. The big decision is whether to be joint tenants or tenants in common:
- Joint tenants essentially act like a single owner. You all have equal rights in the home, you split the profits equally when selling and, should one borrower die, the others will inherit their share.
- Tenants in common have separate interests in the whole property. This means that you can choose how to split the ownership, with one person, perhaps, paying a bigger deposit in return for a bigger share of the value when sold.
Do you trust each other?
Before applying for a joint mortgage with a group of friends, make sure you know the commitment you are taking on. For example, if one person is unable to keep up with payments, the others must cover the full amount.
1Halifax, 2023
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.
It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
Information is based on our understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.
Tax treatment is based on individual circumstances and may be subject to change in the future.
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