Property

Property: Could a joint mortgage make it easier to get on the property ladder?

Clubbing together to buy a home may be a good idea for some people, but it’s worth considering the pros and cons first. By Vicky Shaw.

Buying a home with someone else is one way to get on the property ladder faster, with two incomes instead of one.

And with mortgage costs having increased significantly in recent months, the prospect of higher monthly mortgage payments may also push people towards thinking that two is better than one when it comes to taking out a home loan.

While joint mortgages are often taken out by couples, there are others who may see the benefits of take out a mortgage together, for example, it could be friends or relatives who are clubbing together.

Before you make the leap though, there will be some things you’ll need to consider.

This includes credit scores – and the impact that having your finances linked with someone else could have on you.

James Jones, head of consumer affairs, Experian UK & Ireland, says: “Taking out a joint mortgage can help both account holders strengthen their credit scores, which can be particularly useful if either applicant is starting with a limited credit history.

“But it’s important to remember that a joint financial commitment like this links your credit reports together in the eyes of lenders.”

He says this means that any future applications either party make could be affected by the other person’s borrowing track record, “so that’s certainly something to bear in mind”.

When taking out a joint mortgage you’ll need to consider how payments and the ownership of the property will be split. You may also want to keep a record of what each person put towards the deposit, for example.

It’s important to also consider what would happen if one of you loses their job and, if you’re buying with a friend, what would happen if one of you wanted to move out.

Charles Roe, director of mortgages at banking and finance industry trade association UK Finance, says: “Buying a home with one or more other people can have its benefits, including being able to borrow more money and the possibility of a higher deposit if you’ve all been saving.

“However, a potential downside is that the financial commitments of all parties will need to be considered, such as student loans and credit card balances. The higher the outstanding commitments, the less you can borrow overall.

“Additionally, if one borrower loses their job, the other borrowers will still be responsible for repaying the whole mortgage. If one borrower decides to move out and leave the mortgage, an affordability assessment will be done to make sure the remaining borrowers can afford the mortgage.

“Borrowing jointly can be a great way to get onto the housing ladder, but borrowers should seek independent legal advice before signing any contracts to understand the risks involved.

“If borrowers do find themselves struggling to pay their mortgage, they should reach out to their lender for help.”

Experian says it’s also possible to get financial associations removed, if you no longer share finances, such as a mortgage, with someone you’ve previously been linked with.

You can do this by contacting credit reference agencies, but be prepared to show evidence that your financial connection has ended.