Property inflation has overtaken wage increases over the years. For most people being able to afford a suitable property, they will need to buy with someone else because there are then two incomes for Lenders to take account of when calculating your highest mortgage amount. Having someone to share costs with, you need to take into account some risk to consider, and here are some scenarios we have encountered previously.
From our experience, some Lenders allow a maximum of four people jointly to co-own a property. In the event of one borrower stopping their contributions to mortgage payments, any joint owners have a legal right to stay in their home unless a court rule otherwise.
Therefore, you need to be very choosy about whom you want to purchase a property. If you are going to increase the mortgage at a later date, all borrowers need to consent. It’s crucial that you make long term plans about what might happen down the line should you end up wanting different things.
Generally, married couples or those in civil partnerships opt for Joint tenancy. If either applicant were to perish, then the property passes to the other owner. If you have taken out Mortgage Life Insurance in Leicester, then the mortgage would be repaid at that point also. You will need the consent of the other applicant if you want to sell or Remortgage in Leicester, in the future.
Tenants in common sometimes get chosen by relatives or friends that buy together. You will still jointly own the property, but you don’t have to do so in equal shares. The method works well if one party is making a more significant financial input than the other. If you are a tenant in common, you can choose to act individually. For example, you can sell or give away your share of the property to someone else.
All mortgage borrowers are jointly and severally liable for mortgage payments. If one of the parties stops paying, then the other/others will have to make up the shortfall to prevent the mortgage from falling into arrears. Arrears on a mortgage may stop you from getting another mortgage in the future. Think of it like this: you don’t own 50% of a property, you own 100% of it jointly.
Removing someone from a mortgage can be very difficult. Lenders will need to be confident that you can afford the mortgage payments on your own before they permit this. No one who buys a home with a partner does so with the intention of things not working out. A mortgage is a massive financial commitment, though, and making changes to it later is not always easy.
Even if you can demonstrate that you have been able to maintain mortgage payments since your ex moved out does not guarantee that a Lender will agree to your request to put the mortgage into your sole name. Lenders like the idea that there are two people to pursue in the event of arrears occurring.
To remove someone, they will carry out a brand-new affordability assessment, precisely in the same way as they would at the point of purchase if the Lender declines the request you. You should contact a Mortgage Advisor in Leicester to see if other Lenders would agree to your request to transfer the mortgage into your name. It can be worth talking to family members to see if they can help you out.
They can do so by replacing your ex on your mortgage or by gifting you a lump sum to reduce the amount owed.
If you and your partner split up and you leave the family home, then you remain responsible for mortgage payments with them. A typical case even if you agree with your ex that they will make all the payments. If you are sending your partner money each month, you should keep an eye on your credit report to ensure they are paying the mortgage.
If they default, then it will impact your score. If you get connected to an old mortgage, then the payments for that will be considered if you subsequently want to buy a new home of your own. That will mean Lenders might not lend you as much as you would like. Buying a home with anyone is a risk, so you need to go into it with your eyes open.
It’s always better to agree on what would happen to the house should things not work while you are all still getting along well!