| Friends | Families | Shared Ownership |
In association with:
Britannia Building Society
Notting Hill Housing
Joint Ownership
We are often asked: 'if we have different incomes, do we own less of the property'? In this section we try to explain some of the basic principles of Joint Ownership of property (and of course, joint ownership with a joint mortgage).
Share to Buy - a new form of joint ownership
Joint Ownership in the context of residential property is quite simply where more than one person owns a property together. If the joint ownership of the property involves a mortgage, then the mortgage will be on the basis of 'joint and several liability'. That is, all parties to the mortgage are jointly and severally liable for repaying all of the mortgage. You can find more information on this point in our section on the share to buy joint ownership legal agreement.
Share to buy is a type of joint ownership where a structured legal agreement sets out the framework in which the property will be owned. This is the 'share to buy legal agreement' which we provide for free and sets out, among other things:
- the share each person holds in the property and the mortgage
- what happens in the event that one of the joint owners wishes to leave
Legal forms of joint ownership
Of course, share to buy is ultimately a brand name we have chosen for clubbing together to buy a property and while there is a legal agreement involved, it is very sensible to put such an agreement in place but it is not compulsory. However, there are forms of joint ownership that have specific legal grounding. There are two main types, joint tenants and tenants in common.
- Joint tenants: neither party can sell without the other's agreement. If one party dies, the other automatically inherits the other's share. This is ideally suited to married couples or partners buying together who are in a long-term relationship.
- Tenants-in-common: each party can dispose of his or her share, either whilst alive or through a will. This is more appropriate for friends buying a property together, where they do not intend to live together as a couple.
The share to buy joint ownership legal agreement, which we provide for free, requires that you hold the property as 'tenants in common' so that if one of the owners were to die, their share in the property passes to their estate.
Determining 'how much you own'
There are some misconceptions about how ownership in a Joint Ownership Mortgage, such as share to buy, is calculated. As said, a key principle of any joint mortgage is that the loan is offered on the basis that all borrowers are jointly and severally liable. However, while the lender will make the offer of mortgage on the basis of the joint incomes of all applicants, it is ultimately up to the borrowers as a group to determine how they divide the monthly repayments on their joint mortgage. For example, we are commonly asked if the fact that one applicant earns more than another means that they will have a bigger share of the mortgage (and potentially, the property itself).
In fact, as long as all applicants are comfortable with the repayments, even if they have varying incomes they can agree to split repayments equally giving each of them a straightforward equal share in the mortgage.
Of course, the situation can be complicated where applicants have different deposit amounts. Even with different deposit amounts, it is possible to have equal ownership overall once the mortgage is taken into account. This is because the mortgage can be divided according to how the borrowers choose, and they can choose to divide the monthly mortgage payment so as to 'even out' the differences in deposit.
Click here for a detailed example of uneven deposits.
If you have any queries about your case, please contact us with your queries.
Next Steps
Click here to see how much you can borrow on our joint ownership mortgage calculator, or read our guide to the application and house buying process.
Mortgage Tools
- Mortgage calculator – see how much you could borrow alone or as a couple, with friends, family or on a shared ownership mortgage. A basic estimate.
- Mortgage illustration – you submit summary details for each applicant and a member of our team will reply with an estimate of your mortgage potential and provide an indication of likely repayments.
- Agreement in principle – you provide detailed personal information and we respond with detailed illustrations for a choice of specific mortgage products currently available in the market. If you like one of the products, you can then request a non-binding decision from the lender confirming whether they would agree in principle to lend you that amount, subject to valuation and income verification. This can be very useful to prove to a vendor or housing association that you are able to purchase a property.
Mortgage Information
- House Buying Process – including details of how to apply.
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