Multi-Applicant Mortgage
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Multi-Applicant Mortgage
Tom Appleyard is back to explain how a multi-applicant mortgage works.
What is a multi-applicant mortgage or a multi-person mortgage as it’s otherwise known?
We tend to refer to this when there are more than two applicants on an application.
How does a multi-applicant mortgage differ from a joint mortgage?
A multi-applicant mortgage usually differs from a joint mortgage in that it’s more specialist to have more than two applicants to assess. The criteria can vary from lender to lender, depending on the situation.
Who can get a multi-applicant mortgage? Who is eligible for one of these?
It predominantly comes down to the individual circumstances. Most people can apply, but affordability is important. Can you use all four incomes? Some lenders do have limits on that, and may just use two incomes.
We often see situations where friends buy together in more expensive areas like London and down on the coast. Also, it’s popular for family members to support someone’s affordability.
It can be used in conjunction with Joint Borrower Sole Proprietor criteria as well, and is available on both a residential and Buy to Let basis.
How do multi-applicant mortgages differ from standard mortgages?
It tends to differ due to the underwriting that’s involved. There’s a little bit more to assess. It’s just making sure that the scenario makes financial sense.
What types of properties can you get a multi-applicant or multi-person mortgage on?
Most properties will be considered, as per normal mortgages. As long as it meets the lender’s usual requirements and policy, it’ll come down to a valuation taking place.
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How is ownership split?
There are numerous ways it can be done, like in the Joint Borrower Sole Proprietor approach. For example, in multi-applicant mortgages some applicants might not want to be on the deeds while others do. Some people might not have any ownership there at all. Otherwise, clients can split it however they want to.
It would generally come down to speaking to solicitors and splitting it on a legal basis in line with your plans.
How much can you borrow for a multi-applicant mortgage?
Again, it varies from lender to lender, but generally we work on 4.5 to five times the income. What will make a difference is whether the lender is able to use all of the incomes on the case, or just a maximum of two people.
Any committed outgoings and other lifestyle circumstances will also be considered, as they usually are.
What are the benefits of a multi-applicant mortgage? What are the risks?
The main benefit is affordability. More incomes are involved, to increase the maximum borrowing available. It allows clients access to more borrowing power than they’d have as an individual or on a joint basis. It can also help parents to support their children’s mortgages, or vice versa.
One downside is that all the applicants are liable for the mortgage. Everybody needs to be on the same page and agree how those payments are going to be met.
The underwriting might be a little bit more complex, and so more evidence could be required. Lenders may ask more questions to ensure it goes through smoothly. But that’s what we’re here for.
Are there any alternative options to a multi-applicant mortgage?
Other than standard joint and individual mortgages, it’d be looking into gifted deposits or other lender schemes, which might be designed to support affordability. There could be options to help clients without the need for those extra applicants.
You’ve demonstrated how a mortgage broker can help – is there anything else you’d like to add?
Speak to a broker, take that advice and we will make sure it goes through as smoothly as possible.
Your property may be repossessed if you do not keep up repayments on your mortgage.
The Financial Conduct Authority does not regulate some forms of Buy To Let mortgages.
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