First Time Buyer Joint Mortgage
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First Time Buyer Joint Mortgage
Tim Marcer explains how a joint mortgage works if you are a First Time Buyer.
How do joint mortgages work for First Time Buyers?
They are similar to any other joint mortgage application. Both applicants are assessed on their incomes, outgoings and any other criteria that they have.
Whether you’re employed or self-employed, lenders look at the income and outgoings such as loans, credit cards or hire purchase arrangements. They also check if a client’s got dependents or any other income.
My partner is a First Time Buyer, but I’m not. What are my options?
There’s not a lot of difference. However, we do see the situation where one client has got a house and a mortgage, while the other is a First Time Buyer. We had one this week, in fact.
We’ve been told by one lender that it depends which applicant we put into their system first. That picks up whether it’s a First Time Buyer or a next-time buyer application. With that particular lender, it would mean there is a different product.
Sometimes there are incentives for First Time Buyers – maybe some cash back. On this occasion, strangely enough, there was a better product and more incentives for a next time buyer. So we put the next time buyer in first and got them a better deal.
So it’s down to the broker to assess the right thing to do, because there can be pros and cons whichever way we do it.
Do both buyers have to be First Time Buyers? Do couples lose First Time Buyer status if one partner bought in the past?
It really is dependent on the lender, because they all have different criteria. Some lenders may even consider you as a First Time Buyer if you’ve not had a mortgage for the previous three years.
If they’ve got incentives or benefits for a First Time Buyer and you’ve been living with parents or been renting for a few years, you may fall back into the First Time Buyer category. A good mortgage broker will advise you of the right thing to do.
Do I have to pay stamp duty if my partner is a First Time Buyer but I’m not?
We’re qualified mortgage and protection advisors and not tax advisors. Our default position is to tell clients to seek advice from a tax specialist or a solicitor, to get that specific advice for their particular circumstances. Always check it out and get the correct advice.
What does being joint tenants or tenants in common mean?
This applies whether you’re First Time Buyers or not. It’s about how you own a property. Again, a solicitor will talk specifically about this.
To keep it as simple as I can, joint tenants both own the property equally. Most people go into owning property in that way.
With tenants in common, in simple terms, you own a percentage. You could own it 50-50 or 60-40 – whatever derivative you choose. You might want to do that for various reasons – perhaps somebody’s putting a higher deposit in.
Speak to a solicitor and they will go through that in specific detail and the pros and cons of each option.
Can I get a mortgage with a guarantor?
Yes. Generally it’s a close family member such as a parent or sibling who would go on the mortgage with you.
There can be restrictions around that – if it’s a parent, there could be age restrictions. A guarantor could help if you’re a First Time Buyer, a low income earner or you have a small deposit. It’s all down to criteria.
A guarantor is ultimately saying they will pay the mortgage and safeguard the lender’s payments, as well as protecting the mortgage for the client.
There’s a lot to look into with a guarantor mortgage. It works for some people but not for others – as it’s down to individual circumstances. A good broker will work through a client’s individual situation to get the right resolution and the right outcome.
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How much can we borrow as First Time Buyers on a joint mortgage? How much deposit do we need?
The criteria for First Time Buyers and next-time buyers is generally the same. It’s based on personal income and outgoings, whether they’ve got dependents or not, whether it’s a joint mortgage on a single income.
Every lender has their own affordability calculator with different criteria within that. The important thing here is to speak to a mortgage broker who can look at all of these. A First Time Buyer may have seen a bank directly and been given a figure they could borrow, which could be pleasing or disappointing to them.
But unbeknown to them, another lender may lend a lot more. So that’s what brokers do. We look at different lenders to get the best option.
What is a Joint Borrower Sole Proprietor mortgage?
This can relate back to a guarantor mortgage, because after seeking special advice there could be tax implications.
To give you a real-life example, we had a father and daughter buying a property together because the daughter was struggling to get the borrowing required. The father wanted to come on as a guarantor, but there were tax implications there. So, after they’d seen professionals to get that advice, we did a Joint Borrower Sole Proprietor.
What that means is that the father and the daughter went on the mortgage, but only the daughter was on the deeds of the property. It’s her property, and she used her father’s income to get extra borrowing to support that application. The daughter then could buy the house that she wanted.
In Joint Borrower Sole Proprietor cases, all parties in that situation would have to seek independent legal advice. It’s generally a requirement from a mortgage lender to make sure everyone is fully aware of all implications going forward.
It’s a way that can avoid certain taxes. But please do seek that tax advice and independent legal advice.
Can you transfer a joint mortgage to one person?
Absolutely, and vice versa – you can go from one person to a joint mortgage, as well. Again, a full assessment will be done by the lender for affordability and credit worthiness.
If it’s going from joint to one person, the mortgage will have to be affordable in that one person’s name. Does that person’s income and outgoings support that borrowing? If not, there could be a problem in obtaining that.
A mortgage broker will go through the full criteria and assess affordability to make sure it all stacks up. We then apply accordingly.
If it’s going from single names to joint names, perhaps the person coming onto the mortgage has a job or is self-employed. If they’ve got an income that will enhance the borrowing. Again, we make sure they are credit worthy and there’s no previous adverse credit history, as lenders call it.
How do you calculate a joint mortgage for a First Time Buyer?
Again, it’s based on income, outgoings, creditworthiness and other factors – the number of dependents can come into it. It will be down to all those factors as I alluded to earlier.
Can I get a joint mortgage as a First Time Buyer if I have bad credit?
Yes. The severity of the bad credit will come into play and can determine the amount of deposit you need.
A smaller deposit mortgage will probably require an impeccable credit record. When you’re putting less deposit into a property, the risk is higher to the lender. They look at credit worthiness to make sure people have been paying back all their credit on time.
If they haven’t, and there’s the odd missed payment and little blips, you may need a larger deposit – maybe 10%, 15%, 20% or more. Again, it’s down to that individual. If it’s more severe, where they’ve gone into defaults and County Court Judgements, they may need a bigger deposit again.
In some cases we do get declines, unfortunately, for clients in a more severe situation. It could be difficult. But there are adverse credit lenders out there. They come with potentially higher rates and arrangement fees because it’s a higher risk to the lender.
How can a mortgage broker help us get a joint mortgage as First Time Buyers? Any final thoughts?
I’m bound to say this, but see a mortgage broker – whether that’s us or anyone else. If you walk into a bank or a building society, they’re only going to quote their products. If you went into Santander, they can’t tell you about what products Halilfax has.
But a mortgage broker doesn’t work for the lender. We work for the client, to get you the most suitable deal by doing calculations and affordability analysis, looking at products that are always changing.
I might see a client today and loosely look at some products for them. They go away, find a house to buy and come back to us. The product at that point could be completely different, with a new lender. We keep on top of the market to ensure that each client is getting the right deal from the most appropriate lender at that point in time.
In this day and age, everybody is used to shopping around because the cost of living is so high. We shop around for utilities and telecommunications deals, and you should do the same with your mortgage. The person who can do that for you is a mortgage broker.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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