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Joint Mortgage With Parents

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Joint Mortgage With Parents

Jon Cole explains how to obtain a joint mortgage with parents.

Can I get a joint mortgage with my parents? Is there an age limit?

Yes, you can get a joint mortgage with parents, and lots of lenders allow this. They do have restrictions on the age of the parents – generally, a mortgage is limited to retirement age, 70, 75, or 80, although a few lenders go beyond this.

Can I get a mortgage with my parents if they are retired?

Yes – despite frequent age limits for a joint mortgage, some lenders will go beyond retirement. Pension income can also be used, in which case the mortgage terms can potentially be longer.

What’s the difference between joint tenants and tenants in common?

With joint tenants, everyone involved shares equal ownership of the entire property. Each person has a 100% stake in the property, and decisions must be made collectively. This type of ownership is often chosen by married couples or close family members.

With tenants in common, each owner holds a specific share of the property, which can be equal or unequal. For example, one might own 60% while another owns 40%. This arrangement is more common among friends or business partners.

It can be beneficial to clients with an unequal or gifted deposit from one side, who may want that protected.

How much can you borrow with a joint mortgage?

It’s the same as a conventional mortgage. The average limit is 4.5 times the total income, subject to the client’s commitments, but some lenders would look at multiples of five, 5.5, and six as well.

What criteria are needed for a joint mortgage with parents?

It’s treated like a normal mortgage, although the parent would need to obtain independent legal advice. They are generally homeowners already, and often with the joint mortgage, they would be tied to the property but not own it.

Who pays a joint mortgage with parents? Is it 50-50?

All parties that are named on the mortgage are jointly and severally liable for the mortgage. However, generally, the proprietor of the property would pay.

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. 

How do mortgage lenders assess affordability on a joint mortgage with parents?

They take the client’s income and commitments into account, and also the parent’s income and commitments. It gives a higher lending amount.

Some lenders might only take a proportion of the parents’ income, knowing that, in the near future, the main applicant might want to take the mortgage solely.

Can you get a joint mortgage with other family members or friends?

Absolutely. A joint mortgage with parents is commonly known as a Joint Borrower Sole Proprietor. This can be done with friends, colleagues, or other family members – it works the same way.

What happens if only one person pays the mortgage?

That is absolutely fine, as long as the payments are met on time.

What are the alternatives to a joint mortgage with parents?

There’s a Joint Borrower Sole Proprietor, as we mentioned, and you can even look at a four-way application if the parents will live in the property.

There’s also a rent-a-room scheme, where if the client is purchasing a property with more than one bedroom and is looking to rent a room out, this can be used towards affordability calculations. A limited number of lenders would look at this.

What else do we need to know about a joint mortgage with parents?

Lots of different types of schemes are available – and a joint mortgage with parents might actually not be the most suitable option.

Always speak to a mortgage broker – we will identify your needs and find the right solution for you going forward.

Key Takeaways:

  • A joint mortgage with parents is widely allowed by lenders, though restrictions exist on the parents’ age; generally, the mortgage term is limited to when the parent reaches 70, 75, or 80. Retired parents can still apply, and pension income may be used to secure longer mortgage terms.
  • Lenders assess affordability by taking into account the total income and commitments of both the client and the parents, which typically results in a higher lending amount. The average borrowing limit is 4.5 times the total income.
  • All parties named on the mortgage are jointly and severally liable for the mortgage. While the proprietor of the property generally pays, it is acceptable for only one person to make the payments, provided they are met on time.
  • Two main types of ownership are available: joint tenants, where everyone shares equal ownership of the entire property, and tenants in common, where each owner holds a specific, potentially unequal share (which can be beneficial for protecting an unequal or gifted deposit).
  • This arrangement is commonly known as a Joint Borrower Sole Proprietor, which can be done with friends or other family members. Given that a joint mortgage may not be the most suitable option, and alternatives like the rent-a-room scheme exist, it is advised to always speak to a mortgage broker.

 

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

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