Credit Score Basics > How do joint mortgages work in the UK?

How do joint mortgages work in the UK?

Wollit Team3 minute read · Updated 30th June 2024

Joint mortgages work pretty much in the same way as regular mortgages. You’ll pay a deposit, then take a mortgage on the remaining amount. The main difference is that you’ll have more than one person named on the mortgage contract. This means that the people named on a joint mortgage can save for the deposit together and pay monthly repayments together. This can also mean that you’re able to borrow more than by yourself, as the lender will look at the combined income of both or all people.

Joint mortgages are a common way for two or more people to buy a property together. This arrangement can be great for those who want to share the financial burden of owning a home, such as partners, friends, or family members.

What are the different kinds of joint mortgages?

A joint mortgage is basically a mortgage that is taken out by two or more people who are then jointly responsible for repaying the loan. The property is owned by all the applicants, and the mortgage is registered in their names.

Because of this, joint mortgages can be structured in two different ways:

Joint tenancy: In this arrangement, all the applicants have equal rights to the property, regardless of how much they contributed to the deposit and monthly repayments. The applicants will also be jointly responsible for the mortgage. If one person dies, the property automatically passes to the remaining owners.
Tenants in common: This option allows each applicant to own a specific share of the property, which can be of different values. So, for example, you can own 70% and your partner the other 30%, based on how much each of you invested in the property. If one person dies, their share can be passed on to someone else according to their will, not necessarily to the other applicant.

Can you get a joint mortgage with friends?

Yes, you can get a joint mortgage with friends or partners. You don’t need to be married with someone to qualify for a joint mortgage with them.

Many lenders, in fact, accept more than two people on a joint mortgage, as long as there is some sort of relationship (romantic or otherwise).

However, if you decide to get a joint mortgage with friends, make sure you discuss exactly how it will work beforehand. You should decide:

How much everyone will contribute;
How you will divide the equity of the home;
What you will do if one of you wants to leave the deal at any point.

This usually means deciding to go for a “tenants in common” style mortgage instead of joint tenancy.

You should also ask everyone to check their credit history as it could affect being offered a mortgage. It will also create a “financial association” on your credit report which will be visible to lenders and will affect your chances of getting other loans in the future.

How do lenders look at different credit scores for a joint mortgage?

Here are the usual scenarios:

Lower score prevails: In some cases, lenders may base their decision on the lower credit score of the two of you. This means that if one of you has a poor credit score, the lender may decline the application even if the other applicant has a good credit score.
Joint score calculation: Other lenders may use a joint scoring system that combines the credit scores of both applicants to determine the overall creditworthiness. This can result in a better outcome, especially if one of you has an excellent credit score.
Specialist lenders: Some lenders specialize in providing mortgages to applicants with poor credit. These lenders may care less about the credit scores and more about affordability and the size of the deposit. They might also offer restrictive terms, such as higher interest rates, to mitigate the risk associated with the poor credit score.

How do credit scores affect joint mortgages?

Credit scores play a major role in the joint mortgage application process. Lenders will look at the credit history of all applicants, including any missed or late payments, credit agreements, and financial associations.

The credit score of each applicant will be considered, and the lender may add the scores together to determine the overall creditworthiness of the applicants.

This means that if you’re applying with your spouse and one of you has a poor credit score, it can affect the overall credit score and make it more difficult to get a joint mortgage.

However, it is still possible to get a joint mortgage even if you have bad credit. Specialist lenders may offer other conditions, such as higher interest rates, to make up for the risk that comes from lending to applicants with poor credit scores.

Is it worth paying more in interest to secure a mortgage? Consider the fact that for a £500,000 mortgage taken for 30 years, a simple 1% increase in interest rate means more than £90,000 paid on top over the course of the loan.

This is why it’s so important to work on improving your credit score before applying. Luckily, now there are many apps that can help you build and improve credit.

One such app is Wollit. Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies. This gives you a chance to continue building your own credit history and improve your credit score without the fear of financial associations and without having to be linked with someone else’s credit rating.

On top of this, Wollit can also report your monthly rent payment to Experian. This can add another line in your credit report that shows lenders that you’re reliable and pay your bills on time, helping you make the most of your rent while you prepare to become a homeowner.