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Adding Partner to Mortgage
You may have a long term partner who you have been living with and are thinking about taking the next steps in your relationship and considering to add your partner to your mortgage.
It usually isn’t a problem because if you have a partner that can contribute financially, there is an increased chance of your mortgage loan being paid off, but it isn’t as easy as just adding a name so in this article we will discuss in further details the step that are required to add your partner to your mortgage.
How do I add my partner onto my mortgage?
To start the process of adding your partner to your mortgage, you should approach your current mortgage lender and they will carry out checks on your partner just as they do for any other type of mortgage application. They will carry out income and affordability checks and check your partner’s credit score and credit history. If they are not satisfied with your partner during those checks, the lender has every right to refuse the request of adding your partner to your mortgage.
You can approach a new lender if you are not tied into a product with your current mortgage lender. If you are midway into a deal with your existing lender, there may be hefty exit fees so take this into consideration before deciding to switch lenders. Bear in mind, you will both be required to undergo the usual checks just like any other type of mortgage application. There is the potential that you may be able to access a better deal and interest rate by switching lenders.
Other things to consider when adding your partner to your mortgage
A joint mortgage or even a joint bank account will make two parties associated with each other so if one parties’ credit rating is poor, it might have an impact on the other parties credit score. This might make it more difficult to remortgage or take out other loans in the future. It is rational to discuss both your financial standings together first and checking both your credit history to ensure it won’t have a negative impact on each other.
A lender may charge you an administration fee for adding your partner to your mortgage and usually you will be required to seek legal advice to carry out the process of adding a partner to a mortgage so be aware that there might be added costs involved.
It is a wise idea to ensure any wills are up to date and amendments made if required.
Joint tenants vs tenants in common
If you are considering on adding your partner to your mortgage, you will need to decide whether to hold the property as joint tenants or tenants in common.
Joint tenants or joint tenancy – this is the most common option for couples. Both parties have equal share in the property and is both equally and severally liable for the mortgage loan. This means if there are defaults in payments, the lender can sue either one or both people for the whole loan amount. In the event one person passes away, the property would be passed on to the other party and they wouldn’t be able to leave their part of the property to someone else in their will.
Tenants in common – generally this is used between friends or siblings who own a property together rather than a couple. How this differs from joint tenants is that the share of the property is split between the two parties, by a percentage split of their choosing (does not have to be 50% each). When the property is sold, the equity would be split between the two parties as per their percentage share. Tenants in common also has different legal implications compared to joint tenants. In the event of death of one party, their share of the property is not automatically transferred to the other person, but rather passed to the next of kin or named beneficiary.
In both instances, all tenants must be in agreement if they wish to sell the property.
If you are unsure of how to add your partner to your mortgage or what the best approach is, it may be easier to seek professional advice from a mortgage broker. If for any reason you are unable to add your partner onto your mortgage with your current lender, a mortgage broker can help analyse the reason and with knowledge of other lenders on the market, could potentially match you up with an alternative lender and find you a deal that is best for your own personal circumstances.