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Joint tenants vs tenants in common mortgage

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 13, 2023

Joint tenants vs tenants in common mortgage

There are many types of joint mortgages. There are two types of joint tenant agreements. Which one is best for you? These are just a few important questions this guide will answer.

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Joint tenants vs tenants-in-common: What is the difference?

The main difference between joint tenants and tenants in common is that joint tenants share the entire property and are jointly liable for any mortgage debt. Tenants in common are owners of a specific portion of the property but are still liable for any mortgage debt.

For years, couples have bought properties together. Due to the significant price rises in houses and higher deposit requirements, this practice is now very popular among many.

In London and the South East, buying with your siblings or friends can be a necessity instead of choice. A mortgage with tenants in common is a great way to climb the property ownership ladder and get out of the private rental market.

The term “tenant” does not refer to renting out a property as a landlord, despite being called that. Check out our guide to mortgages for more information.

What is the process of joint tenant mortgages?

The most common mortgage arrangement for long-term partners is one with joint tenants.

A joint tenancy mortgage would allow for the transfer of property and mortgage liability to one owner upon the spouse’s death.

Shared tenancy mortgages are treated as though each person owned the entire property. Therefore, any sale would give each owner an equal share of the proceeds. This is the benefit of a mortgage that has tenants in common.


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What is the process for common mortgage tenants?

Each owner can transfer their share of the property by having tenants in the common mortgage.

Joint tenancy mortgages don’t necessarily have to be equal. It could be 50/50, 70/30, etc. This could be ideal for applicants who invest different amounts of money in a property.

If you buy with friends, tenants in common may be a good option. However, there are other situations where it might make sense.

Our experts can calculate the monthly mortgage payments for joint tenants or common mortgage payments for your tenants.

Cohabiting couples who have children from a previous relationship could register as tenants in common to protect their children’s rights in their wills.

An older couple could use it to pay for care home fees.

What are the disadvantages?

There are some drawbacks to any financial product. Tenants in common are a more complicated arrangement than a joint mortgage for tenants. This can be confusing if you prefer simple things.

Second, if one of the tenants has to move into long-term housing, it can cause problems. This would mean that the tenant who stays in the house will have to move out of it.

Who is responsible?

If tenants share a mortgage, the mortgage liability is shared by all parties. Therefore, joint tenancy mortgage payments must be made by each name on the mortgage.

Failure to pay the bills by one party will result in the other having to make up the difference, or else their credit rating could be affected.


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Are tenants able to share unequal parts of a property?

Yes. It is not unusual for tenants to have different shares in the property.

Experts recommend that you enter a legal agreement to determine who has what. This is especially important if your share of the property is larger.

This can protect all parties if you ever have a dispute with a co-owner.

Calculation of common mortgage tenants

Online calculators will not give you an exact idea of how much you can borrow or the total cost. However, understanding how lenders calculate these things will help you to understand the types of deals that you may be eligible for.

Calculating ownership

Online calculators will not give you an exact idea of how much you can borrow or the total cost. However, understanding how lenders calculate these things will help you understand the deals you are eligible for.

Calculating affordability

Calculate how much mortgage you can afford for tenants in common. This is done normally with all incomes being considered by lenders, regardless of type or amount.

Most providers limit their lending to 4.5x salary, while some lenders lend 5X and some 6.

Calculating the costs

It is important to understand that the rates and deals for a common mortgage are the same as standard mortgages. This will allow you to estimate how much tenants might pay. The type of ownership has very little or no effect on the product you have access to.

Send us an enquiry to receive a mortgage quote with the best deals. We can refer you to the right broker.


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Qualifying to be a tenant in common or jointly mortgagee

No matter if the borrower is a joint mortgagee or tenants in common with another, they must be able to meet lenders’ criteria. One owner must pay the mortgage if the other person stops paying.

There aren’t many differences between these two models regarding applying for a loan. It’s not a matter of getting a joint mortgage or a tenant in the common mortgage.

Only when the advisor has submitted your application for a mortgage and received an offer can the solicitor speak to you about how you wish to purchase the property. You will then need to decide whether it will be a joint mortgage or tenants in common. However, it is a good idea for you to inform the solicitor about your intentions.

A property can be registered by up to four people, depending on who the lender is.

All owners must agree to the sale or remortgage of the property. The courts cannot intervene if one owner wants to force the sale.

The UK’s general criteria for obtaining a joint or tenant-in-common mortgage

Lenders will let up to four people apply for a tenant mortgage together, but they may only consider the incomes of those who make the highest income. However, some lenders will accept all incomes.

Lenders will consider:

  • Credit scores
  • Debt
  • Financial commitments
  • Spending

It can be more difficult to obtain a mortgage for someone with bad credit. If you are self-employed, you might need to use a specialist lender. However, there are many options.

Our brokers are all-of-market brokers with access to lenders on and off the high streets. They will gladly help you find the right lender for your needs.

Send us an enquiry, and we’ll help you find the right person to assist with your situation.

The usual lending criteria apply, and while each lender will accept different types of loans, the majority will consider:

  • Accessibility: Most lenders will accept income up to 4x.5x, while some may consider income as high as 6x. Some lenders favour self-employed while others prefer customers with variable incomes, such as those applying for a mortgage with a bonus or commission.
  • Deposit Most lenders require at least 10%, but some will accept 5% under the right circumstances.
  • Credit history – Lenders will consider all credit issues – the more recent and severe the issue, the greater the deposit.
  • Age – Older borrowers might have difficulty borrowing into retirement with certain lenders or may need shorter terms that impact affordability. However, others can lend later in life and with no age limit.
  • Property: Some properties can be considered riskier. A higher deposit may be required with the local authority, high-rise buildings, non-standard construction, etc.

Trust is crucial when buying a home. It will help you plan how to handle any eventualities, including applying for a mortgage.

No matter your needs or situation, send an enquiry to one of our expert mortgage brokers, and we will get back to you with mortgage advice.

We don’t charge any fees to introduce you. With their help, you can save time, hassle, and money.


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What is a Declaration of Trust, and how does it work?

A Declaration of Trust is a legal document that identifies who owns part of a jointly-owned property and what happens if one person sells it.

Trust can be legally binding. A Declaration of Trust is a document that outlines what happens if one of the owners decides to sell.

This declaration will determine the owners’ contributions to the deposit, mortgage payments, and other expenses, such as stamp duty. It also provides information about how profits would be divided if there is a sale.

This is especially helpful when calculating who owes whom, in the case of tenants sharing a mortgage who make different mortgage payments.

Joint or tenant mortgages for first-time buyers

All applicants must be first-time buyers to qualify for first buyer stamp duties relief

This means that a parent who owns a home and a first-time buyer would be subject to high stamp duty costs. They may wish to consider gifting a large deposit.

A 3% surcharge is currently charged to people who buy second homes. This could mean that stamp duty increases could be substantial.

Some lenders also offer alternatives where family members can contribute to the mortgage but not be co-owners. This is called a joint mortgage, sole owner.


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Change from tenants in common to joint tenants

The severance can be arranged for a joint tenant mortgage if all owners agree. Joint owners become tenants-in-common and vice versa by filling out a trust deed.

This is possible in certain situations, such as when you are separated or divorced from your spouse. You could make the property your own by changing to tenants in common.

A couple can show greater commitment by changing from tenants in common to tenants jointly.

What happens to a co-owner?

As we have already mentioned, if one of the co-owners passes away under a tenancy agreement in common, their share of the property would normally go to the person named in their will.

The terms of a joint mortgage tenancy agreement would allow the owner to pass to each owner. However, they would have to apply first to become the sole owner.

A mortgage on the property may have been outstanding. In this case, the deceased’s estate or life insurance could pay off the balance.


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In this situation, could I remortgage tenants under a common agreement?

Yes, potentially. The sole owner of the property with a tenancy mortgage would need to have a new mortgage assessment to determine if they can afford it and if they are eligible. The property might need to be sold if they cannot pay the mortgage.

Lenders will generally understand the death of a property owner and allow you to decide how to proceed.

You can read more about death in our article. Or, you can speak with one of our experts…

Talk to a mortgage expert about a joint mortgage now

Call us today to get advice if you want a joint ownership mortgage.

We’ll refer you to one of our whole-of-market broker partners for no cost. Their help will allow you to make informed decisions about the type of mortgage you want and save you time and money. We won’t put you under any obligation, and there’s no impact on your credit score.


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