Multi-Applicant Mortgage
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Multi-Applicant Mortgage
Paul Collinson talks to us about a multi-applicant mortgage.
What is a multi-applicant mortgage? Is this also known as a multi-person mortgage?
Yes, it is known as a multi-applicant or multi-person mortgage. It’s basically a joint mortgage with more than two people on it – so it’s a mortgage for three or four people.
How many people can be named on a mortgage? How does this differ from a joint mortgage?
The maximum is four applicants. Most lenders don’t allow four, and of the ones that do, some will only take two of the incomes, while others will use all four incomes.
The lender will always assess the incomes and commitments of all the applicants and their information to calculate the maximum borrowing amount. They also run a credit search on everyone.
All the people in the mortgage are classed as jointly and severally liable to make those mortgage payments.
Who can get a multi-applicant mortgage? Can anyone?
Anybody who fits the lender’s criteria can apply, but you would need to account for affordability. You would need an income of some sort. This is a crucial part of finding out what you can borrow.
You would also need to fit the lender’s credit profile, such as their criteria around missed payments or anything else, along with the income multiples they look at.
How do multi-applicant mortgages differ from standard mortgages?
All the people on the mortgage are jointly liable for it, so the lender will assess each person’s credit profile and situation. You could also have a third or fourth person on a mortgage without being added to the property deeds.
That’s explained in another episode, looking at Joint Borrower Sole Proprietor mortgages.
What types of properties can you get a multi-person mortgage on?
It’s the same as a standard mortgage. You can buy flats and houses, as long as they fit the lender’s criteria for normal standard mortgages – it will be the same for a multi-person deal.
How is ownership split?
If all four people are on the deeds, ownership can be split equally between them. This is called joint tenancy – the name given for the most standard way of doing things where everyone owns an equal share.
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How much can you borrow for a multi-applicant mortgage?
It’s as per a standard mortgage. We would look at all the applicants’ income and commitments along with any dependents they may have. We bring all that into the equation to calculate the maximum borrowing for you and get the answers that you need.
What are the benefits of a multi-applicant mortgage? Are there any risks involved?
The benefit is increased affordability. You potentially get a higher value property and you will probably have a larger total deposit. There are more people on the mortgage to contribute, which is the main positive.
On the negative side, because you’re all on that credit agreement for a mortgage, if others miss any payments on any other credit agreement, it can have an effect on you. Or, if one of the applicants couldn’t afford their share that month, everyone else has to bail them out.
Are there any alternative options to a multi-applicant mortgage?
This is the main option if you want to use someone else’s income to boost the affordability. If you want to add people and borrow more money, the only other way of doing it is a Joint Borrower, Sole Proprietor mortgage or guarantor mortgage. They are both explained in more detail in other episodes we’ve done.
How can a mortgage broker help here? Is there anything else you’d like to add?
It’s the same as always – contact us here at Brick2Brick and we can run through everything with you. We’ll find out the maximum amount you can borrow and guide you through all the way to completion – the day you move in.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
