First Time Buyer Joint Mortgage
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First Time Buyer Joint Mortgage
Samuel talks to us about First Time Buyer joint mortgages.
Who is classed as a First Time Buyer?
In an ideal world, the only point of consideration would be whether or not you’ve bought a home before or not – but it’s not quite so straightforward. The real consideration is whether or not you’ve owned a home.
So, if you’ve owned a home via inheritance or through a previous purchase, you have lost your First Time Buyer status. If you have never owned a property then, yes, you are going to be a First Time Buyer and you would be eligible for First Time Buyer rules.
How do joint mortgages work for First Time Buyers?
Joint mortgages for residential properties work in the same way as a standard residential mortgage – whether you’re a First Time Buyer or not.
Essentially, you will have saved a deposit together and then you take a mortgage on the remaining amount. If you’re both First Time Buyers, some lenders do offer special products, and potentially there’s a saving to be had on stamp duty land tax for First Time Buyers.
My partner is a First Time Buyer, but I’m not – what are my options?
It doesn’t make anything more complicated – it’s like any other joint mortgage. You apply as a couple and you provide all the required documents, bank statements, payslips, etc.
The lender will check your income to determine affordability for the mortgage. There’s nothing to worry about in terms of whether you are First Time Buyers. It’s the same process either way.
There is some stigma around being a First Time Buyer – but realistically it just confirms your status as not having owned a property before.
Do I have to pay stamp duty if my partner is a First Time Buyer but I‘m not?
Unfortunately, yes. The only way to qualify for the stamp duty relief is when both borrowers are First Time Buyers. You would have to bear that in mind if you’re looking at purchasing a property having owned one before. If it’s above the threshold, there would be stamp duty to pay.
What does being joint tenants or tenants in common mean?
When you buy a property as joint tenants, it means you both equally own the property outright. It doesn’t matter if one person’s paid 80% of the deposit and you’ve contributed 20% – you completely own everything equally.
Tenants in common are slightly different. It means you can own unequal proportions of the property should you want to. You can usually have up to four named legal owners, with their splits set out in an agreement.
Speak To an Expert
Come on in and be quite forward with what you’re after – just be very honest with your mortgage broker. It’s good to make sure that we know absolutely everything about you. That way we can’t be blindsided by a lender. An open book policy is very good when coming to see your mortgage broker.
Can a First Time Buyer get a joint mortgage with a guarantor?
Guarantor mortgages are still available, but they’re probably less common now than they used to be – fewer lenders offer them.
These days, there are more schemes available out there to help people on lower incomes, so guarantors are not as popular as they once were.
Schemes like shared ownership are good ways to help people on lower incomes get into the property market. A lot of lenders have phased guarantor mortgage products out.
How much can I borrow as a First Time Buyer with a joint mortgage?
It purely comes down to income and expenditure – it makes no real difference if you’re a First Time Buyer on a joint mortgage. They’ll still assess you in the same way. Lenders will look at your income and take away any committed costs each month – loan repayments, credit card repayments, car finance, etc.
They’ll combine your incomes and generally lend you around 4.5 times that total disposable income. Some lenders may offer slightly more, at up to five times the total, and new lenders in the market will potentially go up to six times.
Usually two incomes are better than one – because the more you have as a combined income, the more you can borrow.
What is a Joint Borrower Sole Proprietor (JBSP) mortgage?
Joint Borrower Sole Proprietor is a way to have multiple names on the mortgage application for affordability purposes. Often it’s someone who is a bit short on income, who brings a parent onto the mortgage for affordability.
Lenders take both incomes for the mortgage, but only one person is named on the deeds of the property – that’s likely to be the younger party. The benefit is that you can just borrow more using the additional income.
Plus, there would be no stamp duty land tax to consider. Because the parent isn’t on the title deeds, it doesn’t matter if they own another property.
JBSP mortgages are fairly common – I’ve done them in the past and my colleagues have done plenty recently. It’s ideal if you have parents with good earnings and not necessarily many outgoings. It just helps boost that affordability.
Can I decide to transfer a joint mortgage to one person?
Yes, this can be done via a transfer of equity through a solicitor. The thing to consider is affordability – because you’re going to be losing one income when you come to refinance the property.
You may find you are short of being able to remortgage with other lenders, if you can’t prove that you have the affordability to manage the loan.
How do you calculate a First Time Buyer joint mortgage?
It’s all based on income and expenditure. Lenders will look at how much you earn and take away any committed costs you have.
They’ll generally lend you somewhere between 4.5 times and five times your disposable income. I’ve had plenty of clients in the past where we’ve been struggling to get to the amount needed, but there is another lender that will lend slightly more and they can proceed with a mortgage.
How can a mortgage broker or mortgage adviser help me get a joint mortgage as a First Time Buyer?
The benefit of coming to a mortgage advisor is you have reassurance and advice throughout the whole process. We will source lenders from across the market to find you the cheapest deal that’s available to you, as an individual or as a couple.
It all comes down to criteria. We will gather your bank statements, payslips and ID and we work out your affordability. Then, we will manage the whole process for you – submitting a mortgage application and running it through to the full mortgage offer. The whole process will be monitored and managed for you.
All we really need from you is your documents and we do the rest. A lot of people come to us feeling a bit nervous or not sure whether it’s even a possibility for them to purchase a property.
After a 30-45 minute chat you can come away pretty confident, knowing how much you can borrow and what it’s likely to cost you if you do proceed. It’s always good to have a conversation, even if you just have a question you want to ask. Ask that question, and you might be surprised at the answer.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.