First Time Buyer Joint Mortgage
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First Time Buyer Joint Mortgage
Harry talks to us about joint mortgages for First Time Buyers.Podcast approved by The Openwork Partnership on 24/07/24
Who is classed as a First Time Buyer and how do joint mortgages work for First Time Buyers?
The definition of who is classed as a First Time Buyer varies depending who’s asking the question. In the government’s eyes, anyone who has owned a house in the past, regardless of when it was – last year or 50 years ago, is not a First Time Buyer.
Some lenders, however, will still treat you as a First Time Buyer if you’ve not owned a house in the last three years.
My partner is a First Time Buyer, but I’m not. What are my options?
The options for a mortgage are essentially the same. The key consideration is the stamp duty cost. If you are not a First Time Buyer but your partner is, jointly you’ll pay the full stamp duty requirement. The other partner won’t benefit from the First Time Buyer stamp duty allowance.
Do both buyers have to be First Time Buyers? Do couples lose First Time Buyer status if one partner bought in the past?
Yes, you do lose First Time Buyer status if one partner has bought in the past. But the mortgage process is very similar. Some lenders do have specific rates for First Time Buyers, but otherwise it’s the same.
What does joint tenants or tenants in common mean?
Joint tenants is when you both jointly own the house, and in the event of a death the property would pass automatically to the other person.
With tenants in common, you could allocate a specific share of ownership on the property. That could be quite useful if you’re buying with friends, for example, and you’ve put different amounts of money in. You don’t automatically want the other person you’re living with to inherit your part of the house. It may also be easier if you both decide to move out and take different splits out of the property.
Quite often couples will buy as joint tenants, while friends or new relationships might want to consider buying as tenants in common. The solicitor you would instruct during the process would give you further guidance, but that’s a high-level overview.
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Can I get a mortgage with a guarantor?
Yes, you could. Different terminology is used by the lenders, but essentially, yes, you could get a joint mortgage with a guarantor.
How much can you borrow as a First Time Buyer with a joint mortgage? How much deposit do I need?
There are a couple of deals with some very small deposits needed. One lender will let you buy with zero deposit, and another one with as low as 1% deposit – but more generally you would need 5%.
In terms of how much you could borrow, as a general rule, it’s 4.5 times your joint income. But for First Time Buyers, a couple of lenders will do some increased multiples.
There are some restrictions – you need a certain amount of deposit or a certain level of income, but potentially, we could look to go to 5.5 times income if you qualify.
What is a Joint Borrower Sole Proprietor mortgage?
A Joint Borrower Sole Proprietor mortgage is a type of guarantor mortgage. There are two borrowers: the person who’s going to own the house and the guarantor. Both of their incomes would be used to support the loan.
So that’s where the joint borrower comes in. On the deeds to the house, only one person is named. They are being supported by the guarantor.
There are slight variations. Not all lenders will offer Joint Borrower Sole Proprietor mortgages, and the lenders that do all have slightly different criteria. So it’s especially important to speak to an adviser if that’s something you’re considering – we’ll be able to guide you on the way to access those.
Can you transfer a joint mortgage to one person?
Yes. There are a couple of different scenarios here. It really ties into whether you’re joint tenants or tenants in common.
Typically, most people buy a house in joint tenants, where if one person dies, the ownership automatically transfers over to the other. The bank will update that accordingly.
You might need to make a change to the mortgage in the event of a separation, or where friends bought together and one is moving out. To move it from a joint mortgage into single ownership, the person who wants to remain on the mortgage would need to show the lender that they could support it on their own.
It might mean remortgaging in your own name to a different lender, but that’s not a given. You need to be able to afford to manage the mortgage, from a lender’s point of view. If not, you won’t be allowed to take that other person off.
How do you calculate a First Time Buyer joint mortgage?
We get payslips from the applicants, look at the annual income and then run affordability calculations. We see what deposit is available and what your current credit commitments are, if any.
Those affordability calculations will then give us a figure. As a general rule, if the credit commitments are low and you’ve got a relatively long mortgage term, almost every lender will offer 4.5 times your joint income – but some lenders could push that up to 5.5 times.
How can a mortgage broker like Aitana help me get a joint mortgage as a First Time Buyer?
There are lots of nuances to getting a mortgage. Going straight to your bank isn’t always the right option. You may need to stretch your income higher than a 4.5 times multiple. You might have a small deposit. There are lots of different things to consider.
So get in touch, arrange a detailed conversation with one of our advisors and we would guide you on the right way to proceed, the most suitable lender and support you through the process.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments
You may have to pay an early repayment charge to your existing lender if you remortgage.
