Joint Mortgage With Friend

What is the maximum age for a joint mortgage with a friend?

That will be determined by the eldest party’s planned retirement age or state retirement age. Most lenders are comfortable to go up to state retirement. Some will go beyond that – but it also depends on how old you are now, your occupation and how old you will be at the end of the mortgage term. There aren’t any different rules here compared with a standard joint mortgage.

What happens if you have a joint mortgage with a friend and the other person dies?

Obviously that’s a horrible situation to be in for anyone with a joint mortgage. Hopefully you’d never find yourself in those circumstances.

The reality is that the surviving person would then be responsible for the whole of the mortgage debt. This is the same for a couple. This is why we recommend considering life insurance options, so that the mortgage would be repaid in full if that were to happen.

Most mortgages are based on two people’s income and with one person unfortunately dying, it could be that that mortgage is no longer affordable.

This is really important to consider – so that, should the worst happen to you, you’re not leaving your surviving friend or spouse responsible for the whole mortgage debt on their own.

Is getting a joint mortgage with a friend a good idea? What are the advantages and disadvantages?

It can certainly be a good idea. The pros are that two incomes could mean you can afford a higher mortgage and get a more expensive property. You would also share the mortgage payment, and household bills and expenses, between two people.

That could make it more manageable than getting a mortgage on your own, with one salary, or renting on your own. Perhaps you’re two good friends who have known each other for a long time and can see that situation working out in your favour.

The downsides are, first of all, that you’re financially linked to the other person. Your credit score and credit history will be linked to theirs. Perhaps I’ve been a bit wayward with my finances in the past and I’ve got missed payments, defaults and CCJs. If we get a mortgage together, my bad credit history is going to link to yours. That could have an adverse impact on your ability to get credit or mortgages in the future.

So think carefully about who you’re getting a mortgage with. The other disadvantage is that in a few years’ time, you might get a fantastic new job opportunity at the other end of the country and need to move, but it’s tricky if you’re settled where you are.

It could be quite restrictive with regards to your next steps on the mortgage, and whether one of you could take it over on your own. You need a plan and to consider how long you want to live with your friend, and how likely it is that you’ll change things up and go your separate ways in the future.

It can work, but it’s not something to do on a whim. There could be other options to help you buy a home.

How do you apply for a joint mortgage with a friend? What’s the process?

It’s the same as any other mortgage done on your own or jointly as a couple. Speak to a qualified mortgage professional and we’ll guide you through the process and highlight the same pros and cons we’ve spoken about.

You’ll be left in an informed position to make a sensible choice, based on your circumstances and your future plans.

You’ve demonstrated how a mortgage broker can help throughout this episode – any final thoughts?

A mortgage broker is here to support you, whatever your circumstances, throughout your whole mortgage journey. That’s why we’re so busy helping clients, and why we’re doing these podcasts – so that people can get the right advice and support to make a significant lifetime decision.

Even if buying with a friend is a fairly temporary situation, you need to consider what happens if your circumstances change. We explain what you can and can’t do and what that all means, before you make a committed decision on the mortgage.

Key Takeaways:

• A joint mortgage with a friend is treated exactly like a joint mortgage for a couple, requiring no additional checks, rules, or paperwork beyond the standard process.
• Both parties are considered ‘jointly and severally’ liable for 100% of the entire mortgage debt, meaning the lender can seek to recover the full amount from either person.
• By combining incomes you can afford a higher mortgage on a more expensive property and share the mortgage payment. A major downside is that you become financially linked, and the other person’s poor credit history could negatively impact your ability to secure future credit or mortgages.
• If one party dies, the surviving person becomes responsible for the entirety of the mortgage debt, which is why considering life insurance options is highly recommended.
• Selling the property or making decisions about the mortgage requires the consent and agreement of both parties, making it crucial to plan for future circumstances like one person needing to move.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.

THERE MAY BE A FEE FOR MORTGAGE ADVICE. THE ACTUAL AMOUNT YOU PAY WILL DEPEND UPON YOUR CIRCUMSTANCES. THE FEE IS UP TO 1%, BUT A TYPICAL FEE IS 0.3% OF THE AMOUNT BORROWED.