First Time Buyer Joint Mortgage
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First Time Buyer Joint Mortgage
Paul talks to us about First Time Buyer joint mortgages.
How do joint mortgages work for First Time Buyers?
It’s much the same as a single applicant mortgage, really. We would calculate the affordability based on your income and commitments, but this time we’d do that on a joint basis.
It would enable us to get you an Agreement in Principle so you can start looking at properties. You’ll know what property values to look at and what deposit to get together.
When a property is found, you put an offer in, if that offer gets accepted I can start to find the most suitable deal for you and process the mortgage application. Both applicants will be liable to make the mortgage payments.
My partner is a First Time Buyer, but I’m not. What are my options?
With most lenders, to get a First Time Buyer mortgage product both buyers would need to be First Time Buyers. Some lenders are okay if only one of you is a First Time Buyer. That’s the only difference, really.
Whether you’re a First Time Buyer or not won’t affect anything else. It’s only the mortgage product you might get – but there are plenty of options out there.
Do both buyers have to be First Time Buyers? Do couples lose First Time Buyer status if one partner bought in the past?
For most lenders, both of you have to be a First Time Buyer, but in some cases it’s okay if only one person is. If anyone has bought a property in the past, they will lose their First Time Buyer status.
Do I have to pay stamp duty if my partner is a First Time Buyer but I’m not?
We’re mortgage advisors, we’re not tax advisors, but there are benefits with stamp duty as a First Time Buyer. These are outlined on the government website or other reliable sources.
If one person on the mortgage is not a First Time Buyer, this will count against the First Time Buyer tax benefits. As a couple, you would lose that allowance.
What does being joint tenants or tenants in common mean?
As joint tenants buying a property, both people have equal rights to the property, which is the normal way of doing things where a couple buys a property and they both have an equal share.
Tenants in common each own a separate share of the property and they don’t have to be of equal size. For example, you might own 50% in the property while your two children each own a 25% share.
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Can I get a mortgage with a guarantor? So how does that work?
Yes, you could. Nowadays these types of mortgages tend to be Joint Borrower Sole Proprietor, which is similar to a guarantor mortgage. It basically means there’s a second person who could go on the mortgage, but not on the property deeds.
They’re helping out with their income to increase the maximum borrowing amount, which is pretty much how a guarantor used to help.
How much can I borrow as a First Time Buyer with a joint mortgage and how much deposit do I need?
If you come to us we would look at both your incomes on a joint basis plus any commitments, credit cards, loans, hire purchase and any children that you have. Based on that, we could ascertain what you’d be able to borrow on that mortgage.
The minimum deposit you will need is 5%, but some lenders are more stringent on the amount that you could borrow based on a smaller deposit. It’s a higher risk for them.
If you had a 40% deposit, the risk is obviously not so big. With a Loan to Value of between 60% and 85%, you could normally achieve the maximum level of borrowing. If there’s only a 5% or 10% deposit, normally you’d be able to borrow a bit less.
What is a Joint Borrower Sole Proprietor mortgage?
As I mentioned earlier, a guarantor mortgage has become a Joint Borrower Sole Proprietor scheme. To elaborate a bit further on that, we often need to look at the age of the parent or guarantor for this, as most lenders only go to the age of 70.
A couple of lenders potentially go up to age 80, so parents could sometimes help their children out that way.
I’ve also seen it work the other way around, where adult children are helping their parents achieve something with their combined income. There are things to look out for on this and things to be wary of. Every situation is different – so come and speak to us and we’ll go through all the different scenarios.
I’ve also arranged a Joint Borrower Sole Proprietor where somebody’s friend is helping them out. But again, you have to be wary about that – it could sometimes jeopardise that joint borrower in other ways. It might affect what they could borrow on a mortgage in future if they wanted to get their own. We could talk you through those things.
Can you transfer a joint mortgage to one person?
Yes. It might be a couple that is separating and one person might want to buy the other one out. There may be other reasons why two people on a mortgage might reduce to one.
You could carry out something called a transfer of equity. It’s normally done when you remortgage the property. You might raise money to take someone off the mortgage and pay them off.
Be wary that when reducing it to one person on the mortgage, the lender would need to recalculate the affordability, to make sure that mortgage balance is affordable on that one person’s income.
A transfer of equity could also cost extra money with conveyancers, in the region of £320 to £400 on top of other costs. So come and talk to us about it and we’ll explain what’s involved.
How do you calculate a First Time Buyer joint mortgage?
Lenders just calculate the affordability based on your joint income and commitments, including any children or dependents you have.
How can a mortgage broker help me get a joint mortgage as a First Time Buyer?
We could help initially with a free consultation. We’ll just look at the whole picture and ascertain the maximum amount you’ll be able to borrow on a joint basis. That would tell you what value properties to start looking for and what sort of deposit you’d need to save up.
We could also obtain an Agreement in Principle for you. Then, when a property is found, you put an offer in that’s accepted, and then we could find the most suitable deal for you and process the mortgage application as smoothly as possible to completion.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
