There are many reasons why you would wish to add someone to your mortgage. If your partner or a family member moves in with you, they may agree to help with repayments and want their name on the official documents. Adding someone to your mortgage can be done. However, it is a complicated process and there are several factors you may want to consider first.
Quick Overview
You can add someone to your mortgage in the UK by either remortgaging to a joint mortgage with them or adding them to your current mortgage. There are several factors to consider, such as your relationship status with them, their credit history and any fees or legal procedures. They will also take partial ownership of the property and be jointly responsible for mortgage repayments.
Can You Add Someone to Your Mortgage?
In most cases, you can add someone to your mortgage. This will depend on factors like their financial circumstances and credit history – the lender will want to conduct checks on them before agreeing to your proposal. They may refuse if the person does not meet their criteria.
Having two people on a mortgage is better than one from a lender’s point of view because it is less risky for them; if one person loses their job or suffers from long-term illness, the other may be able to cover repayments. This doesn’t mean that you are guaranteed success. But it could make it more likely that your request will be accepted if you both have a good credit history and a stable income.
You can add someone to your mortgage in the UK in two ways. You can either remortgage to a joint mortgage with them or add them to your current mortgage.
How To Add Someone To Your Mortgage
You will need to speak to your existing lender if you want to add someone to your current mortgage. You can also get help from a mortgage advisor if you would like support. They will talk you through the process, which will involve the following steps:
- Both you and the person you are adding to your mortgage will be taken through a similar process to when you originally applied. They will have to pass income and credit checks.
- If they manage to pass the checks, they will be officially added to the mortgage. You may need to hire a solicitor to add the new name to the title deed.
- This means that they will be jointly responsible for the mortgage repayments. If a repayment is missed, the lender can chase both of you equally and your credit scores may be affected.
It’s worth remembering that there will probably be fees involved. For instance, your mortgage lender may charge you processing fees and you might have to pay for a solicitor to change the title deed of the property.
How To Remortgage To A Joint Mortgage
Instead of adding your new partner to your existing mortgage, you may want to consider remortgaging to a joint mortgage. Remortgaging is simply where you change your current mortgage out for a new one. You can either do this with your existing lender or a completely different one. A joint mortgage is just a mortgage that has two people’s names on it; both of you are equally responsible for the repayments. You can have a joint mortgage with more than two people, but this is more rare.
You can either get the help of a mortgage broker to remortgage or go directly to the lender. It’s worth shopping around to find the best deal, including asking your current lender what they can do for you. Since you are an existing customer, you may be able to get a better deal with them.
If you opt for a remortgage, both of you will have to go through a mortgage application process. This will involve credit, identity, income and employment checks. It is essentially the same process you went through to get your current mortgage. The key difference is that both of you will have to pass these checks in order to get a joint mortgage.
Which Option is Best?
Which option is best depends entirely on your personal circumstances. A deciding factor could be whether you are subject to an early repayment charge (ERC) on your current deal.
An ERC is when you are charged a fee for ending the mortgage before the end of the fixed period you have agreed to. This fee can be substantial, so it may not be worth remortgaging under these circumstances. If you are unsure whether an ERC applies to you, check with your mortgage provider. It should be listed under the terms and conditions of your contract.
You may also want to remortgage if interest rates are currently low. Shopping around means that you could get a much better deal. On the other hand, it may be best to stay put if interest rates are high. You don’t want to find yourself owing a lot more money on your house than you did previously.
Things to Consider When Adding Someone to Your Mortgage
Adding someone else to your mortgage is a serious move because you won’t be able to easily change your mind once the legal process has been formalised. They will have a claim to your home and may not be willing to relinquish it. For these reasons, you should consider the following factors carefully before making a decision.
Your Relationship Status
Did you know that if you are married or in a civil partnership there is actually less of a reason for you to add your partner to your mortgage? Both of you have a legal claim to the property if the marriage or civil partnership is dissolved. If you were to pass away, the home ownership would automatically pass to your other half and visa versa.
If you are in a relationship with somebody without being married to them, they have no legal claim to your property. If you want them to own your home with you, you will need to add them to the mortgage.
Remember that personal circumstances change all the time. If you add your partner to your mortgage and then break up, they may be entitled to half the equity. If you put down an initial deposit and have worked hard to pay off a part of the mortgage, you may not be happy with them being entitled to half of that. Luckily, there are ways for you to protect your equity when you add someone to your mortgage.
Fees
It’s likely that there will be fees involved in adding someone to your mortgage, although they won’t be as high as when you first bought your home. The fees could cover things like:
- Changing your existing mortgage
- Ending your mortgage early
- Remortgaging
- Stamp Duty Tax
Stamp Duty is a tax that you pay when purchasing a property. You will only have to pay Stamp Duty under very specific circumstances, such as if your partner is planning on paying you for their portion of the house or you are giving them more than an equal share. You can check with your solicitor if you are unsure about whether this applies to you.
Credit History
Your mortgage provider will want to run a credit check on the person you are adding to your mortgage. This is to make sure they can afford the monthly repayments with you. It may seem a little strange since you are already paying the mortgage on your own. However the lender does this in order to mitigate risk.
There is another reason why you might want to think about your partner’s credit score. Getting a joint mortgage links your partner’s credit history with yours. This happens because you now share debt and is called an ‘association of credit.’ Your partner’s financial information will now show up on your credit report if another company does a check on you. Your information will also show up on theirs. This won’t be a problem if you both have good credit scores. If your partner has a very low score, they may stop you from being able to access credit in the future. This is why sharing financial responsibilities with somebody is something that you should consider carefully.
Legal Procedures
It is essential that you get legal advice before adding someone else to your mortgage because there are wider implications, like tax, inheritance and what happens to the property if you separate. A solicitor can give you advice and work out all the legal details for you, including drawing up a pre-ownership agreement.
Types of Property Ownership
When you add someone else to your mortgage it is like that you will want to transfer part ownership of your property to them. In many circumstances, they get 50% property ownership, but you can split it however you like – so long as you both agree. There are two ways you can do this, depending on how much equity you want to hand over to them.
Joint Tenants
Joint tenants is where you both own the property together. Ownership of the equity is split equally. If one of you dies, the other person automatically inherits your home. This also means that if you split up and decide to sell the property, the other person can claim half of the cash.
Tenants in Common
Tenants in common is where more than one person has ownership of a property, but they don’t each have an equal claim to the equity. Usually, you would each own a set percentage that you both agree on. If you add someone to your mortgage and want to protect the amount of money you have already invested, you can ask your solicitor to draw up tenants in common agreement.
Final Thoughts
Adding someone to your mortgage is not as straightforward as you might think. There are many factors to consider, like whether you want your credit score to be tied to theirs and how much equity you want to give them. When you have thought these through, you still need to decide on whether you are remortgaging to a joint mortgage or adding them to your existing one, as well as which type of property ownership is best for you.
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