First-Time Buyer Joint Mortgage

How do joint mortgages work for first-time buyers?

In simple terms, it involves assessing two people’s scenarios. There are two potential incomes, two potential debts and two potential credit profiles to consider.

It’s very similar to arranging a mortgage for one person, but it can mean that one person’s credit, residential status or income could affect the overall scenario.

My partner is a first-time buyer, but I’m not. What are my options?

You can still buy together and both go on a mortgage. That’s absolutely fine.

Because one of you is a first-time buyer, some lenders will treat it as a first-time buyer application, and there might be a reduced fee, a specific product or income booster that might well work for you.

With other lenders you may not qualify for first-time buyer products, so you just go to the normal product range. Lenders still assess income, credit file and affordability the same way in either scenario.

Do both buyers have to be first-time buyers? Do couples lose first-time buyer status if one partner bought in the past?

If one person’s a first-time buyer and the other is not, with some lenders you can still be considered first-time buyers. With stamp duty, though, it’s a different matter, which we’re coming on to.

There could also be strengths in being seen as a home mover and not a first-time buyer. Potentially, either route could be open to you.

With some lenders, it can depend how long you’ve not owned a property. You might have owned a home five years ago, and those lenders would treat you as a first-time buyer.

Do I have to pay stamp duty if my partner is a first-time buyer, but I’m not?

If you asked a tax advisor, they would probably tell you that yes, you do. It’s best to seek advice on that. It tends to be more strict than on mortgages.

What does being joint tenants or tenants in common mean?

This is something you’ll cover with your solicitor or your conveyancer when you’re going through the process. They’ll assess whether you are better off buying as joint tenants or tenants in common.

In short, if you own a property as joint tenants and something happens to either of you, your share of the home goes to the survivor. With tenants in common, ownership will follow what’s stated in the person’s Will – or the laws of intestacy, if there’s no Will in place.

It’s something you need to cover with your solicitor for advice on the best route. You also need to consider getting a Will in place or updated.

Can I get a joint mortgage with a guarantor?

Absolutely. You could have up to four applicants on a guarantor mortgage, or a Joint Borrower Sole Proprietor mortgage.

Effectively, you and a partner or you and a friend could buy together with a guarantor. There would just be fewer options on the market than for a standard joint mortgage.

What is a Joint Borrower Sole Proprietor (JBSP) mortgage?

In simple terms, there’s a sole proprietor, which doesn’t always have to be one person. The proprietor will own the property and be named on the title deeds.

The joint borrowers are people whose income will also be included in the affordability assessment. It’s similar to a guarantor, in that you might have a family member or friend as a borrower, but they don’t own the property. They’re just supporting you with the affordability.

There are multiple considerations with this. Notably, the age of the additional borrowers can impact how long the mortgage would be.

How much can you borrow as a first-time buyer on a joint mortgage? How do you calculate a first-time buyer joint mortgage?

For first-time buyers with a healthy income, a few lenders will offer you a mortgage of around 5.5 times that income. Some may go higher than that.

The norm is 4.5 to five times income, so there’s a boost there for a first-time buyer, as long as you’ve got a steady work situation and income.

Every lender has a target income multiple and also a specific affordability assessment. They might lend you five times your income, but only if that’s completely affordable. If you’ve got lots of debts or car finance, for example, the borrowing will come down in line with your affordability.