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Adding someone to your mortgage

Adding someone to a mortgage

You may have a long term partner and have begun to consider adding them to your mortgage.  They may have been contributing to the household bills or even the mortgage payments themselves, or it may just be the next step in your relationship.

Adding someone onto your existing mortgage shouldn’t usually be a problem and is a common practice across the UK.  Having an extra person on the mortgage may actually be seen as a positive from the lenders point of view as they have an extra set of financial contributions to work with when assessing affordability.

However, it’s not quite as straightforward as simply adding a name onto the mortgage and property documents, as this article will explain in more detail.

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How do I add my partner onto my mortgage?

To add your partner onto your mortgage you will need to approach your current lender and apply to have the additional person added.  The lender will then undertake its standard checks on income, affordability and credit history.  Just like they would do for a regular mortgage application.

It’s important to be aware that the lender has no obligation to add another person onto the mortgage and they can refuse if they wish.  There will likely be an administration charge for the changes to the mortgage, which varies from lender to lender.

Adding your partner onto the mortgage is a legal process and you will need to involve a solicitor, which will add to the overall costs.  Your solicitor will also be able to advise if there is any Stamp Duty payable due to a Transfer of Equity.  There will normally be a Transfer of Equity as the additional applicant will have a share of the property “transferred” to them from the original applicant.

Alternatively move to a different lender

Alternatively you can remortgage with another lender, and apply as joint applicants. 

There are other considerations with this approach however, with the main one being that you may still be required to pay a fee for leaving your current mortgage deal (usually when you are still within your initial “Fixed Rate” period).  If this is the case then it may be worth waiting until your current fixed rate deal naturally ends to remortgage, saving on the fees.  You may also end up with a less favourable rate, depending on what mortgages are on the market at the time.  For working out the best option you may want to engage the services of a professional mortgage broker to help you work through the different scenarios.

Further Considerations

Joining with your partner in your mortgage or property ownership has potential consequences which you need to consider carefully.  Adding your partner to your mortgage means your credit files would be linked and you are also jointly liable for the entirety of the mortgage.

With a  joint mortgage both parties are fully liable for the mortgage, any defaults will be applied on both parties and if there was a default then the lender could pursue either party for the full amount of the mortgage, i.e. each member of the couple is not just liable for “their half” but for the entire mortgage.

Although it maybe a difficult conversation to have, it would be sensible to be fully aware of each others financial situation and credit history and it is important that all parties understand the consequences of joint borrowing.

Joint Tenants or Tenants in Common

There are 2 different ways in which you and your partner (or indeed any individual) can own property together; Joint Tenants or Tenants in Common.  If are going to add someone onto your mortgage you will need to decide which one is the most suitable for you.

The solicitor you engage should be able to advise you which is more suitable for your individual situation.

Joint Tenants

Joint tenants is the most common option for couples.  Both parties would have equal right to the property, much like each individual is as liable as the other for a joint mortgage.

In the event one person passes away, the property would be passed on to the other owner, and they would be unable to leave their “share” of the property to someone else in their will.  This makes it even more important for wills for all parties to be reviewed and updated if required to reflect the new arrangement.

Tenants in Common

Tenants in common is more commonly used for property ownership between friends or siblings who own a property together rather than with a couple.

How this differs from joint tenants is that the share of the property is split between the two (or more) parties, by a percentage split of their choosing (does not have to be 50% each). When the property is sold, the equity would be split between the two parties as per their percentage share.

There are also different legal implications with Tenants in Common; If one party dies, their share of the property passes to their next of kin or named beneficiary. It would not automatically pass to the other owner, as it would with Joint Tenants.

In both Joint Tenants and Tenants in Common, all tenants must be in agreement if they wish to sell the property.

Next Steps to Take

The above article hopefully helped you gain a better understanding of the process of adding a partner to your mortgage along with the advantages and disadvantages.  If you have any further questions or guidance on what the best solution may be, then please get in touch and we’d be happy to answer any queries and help you work out what the best option would be.  We are a Bristol based Mortgage Broker and can advise on a wide range of mortgages.  We also offer more general financial advice (as we are Independent Financial Advisors as well) if you have other financial matters to discuss at the same time as your mortgage.

Your mortgage is likely to be one of the biggest financial commitments over your lifetime, and it’s important to make sure that you avoid making mistakes and deal with any issues in the best possible way.

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