Mortgages can be tricky to understand at the best of times. What mortgage term will you be offered? What maximum loan can you get? What impact will your credit rating, credit history, and credit reports have?
All these questions and so many more run through your brain, whether you’re a first-time buyer or not.
But all that gets three times as tricky when you are applying with two other applicants!
This article will discuss how to get a mortgage with three applicants, the ins and outs of what to expect from discussing this option with lenders, and some of the benefits of getting a multi-person mortgage.
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What is a multiple-person mortgage?
A multiple-person mortgage is a mortgage that has more than one or two people named on the mortgage agreement. However, not every mortgage lender offers this option. Some are concerned it will impact monthly mortgage payments, whereas others do not have the specialist expertise to offer this mortgage to customers.
If you are interested in learning more about a multiple-person mortgage, the good news is that you have come to the right place! This article will teach you everything you need to know about three-person mortgages and how to find one.
Fortunately, some brokers welcome mortgage customers with more than two applicants, either for friends or family members. However, it is worth being aware of some of the restrictions that may be put in place as a result of your desired request. We will cover these restrictions in much greater detail later in this article.
How many people can be named on a mortgage?
In short, the number of people named on a mortgage depends entirely on which mortgage deal you take and what a mortgage broker is willing to offer you. Some lenders only offer a mortgage product for one or two applicants, whereas others offer you the chance to add more applicants.
Some lenders prefer to ensure all applicants live in the property, as it gives them more assurances that mortgage payments will be met, whereas other lenders do not mind if only one of the applicants lives in the property.
You can get a three-person mortgage, but a few lenders only consider a joint mortgage of more than two people if the applicants are all related.
Other lenders will allow a multiple-applicant mortgage to be given to friends and family, but they might not allow all three applicants’ actual income to be included in the mortgage calculator.
To have your mortgage details approved for a three-way mortgage where each applicant’s income is factored in, speak to a specialist broker. While many mortgage brokers offer a strong normal mortgage offering, some brokers are specialists and work with lenders who are used to these sorts of arrangements.
The Benefits of a Multiple-Person Mortgage
There are several reasons why getting a multiple-person mortgage can be extremely beneficial.
- More funds to put down as the deposit
As you would expect, if you are placing a deposit across three people rather than two, then the deposit will be larger. There are so many benefits to putting down a larger deposit, such as getting offered more favourable deals and rates, not to mention not needing to borrow as much because you have paid more upfront.
Payments become much more affordable when there are three of you combining to pay them. Monthly repayments that perhaps would have seemed steep for you on your own suddenly become much easier when you split it across three people.
Not to mention the fact that if one of you is short on money for one month, you can still make the payment and not suffer any late fees.
Finally, one major benefit of getting a multiple-person mortgage is that you might be able to borrow more. If you pick the right lender, they will provide the same income calculations as if you were on your own. So, if they offered you 5x your income of 40k (200k total), and you chose to apply for a mortgage with two other friends who earn 40k, you could get a mortgage offer as high as 600k.
Calculating the Maximum Mortgage Amount
When you are trying to estimate the maximum amount you will be able to borrow as part of a multiple-person mortgage, you need to bear in mind that some lenders only consider the two highest income earners in their affordability assessment.
Therefore, the cap on the maximum loan amount will be based on a multiple of the two salaries combined, not all three. However, they will still check the credit score of all three applicants.
On the other hand, other lenders may opt to change the income multipleA calculation used by mortgage lenders to assess how much a ... to three to cover all of the applicants. There are even some specialist lenders that will consider the income of more than three applicants, although it is rare, and nearly all lenders cap it at four applicants for the maximum loan as part of a mortgage application.
For a joint mortgage, most mortgage brokers will cap the lending at 4.5 times the joint income of the number of applicants they are factoring in. However, they may sometimes stretch even as far as six times the annual income of each applicant. Factors that impact this will include employment status, deposit size, income evidence, income type, and current income.
However, don’t expect many lenders to consider all applicants’ income if you go past 4.5 times the application income.
Frequently Asked Questions
Can I get a mortgage with friends?
Yes, you can absolutely purchase a property with friends. Generally speaking, you will need to factor in the same rules as you would for any mortgage. However, bear in mind some lenders may limit the number of people you are allowed to put on the mortgage or how many incomes can be factored in.
Can more than two people apply for a mortgage?
It is standard practice for a mortgage lender to cap the number of people they are happy to offer a mortgage to at two. However, in some instances, joint mortgages can be offered for three and sometimes even four applicants.
How do mortgage lenders assess eligibility for a joint mortgage with applicants?
For a joint application, mortgage lenders tend to assess mortgage affordability by evaluating the mortgage multiples on offer and adding up each applicant’s income to identify how much they can borrow.
Ultimately, the lending criteria, mortgage term, and mortgage repayments will vary from applicant to applicant.
A Mortgage with 3 Applicants: Summary and Key Takeaways
Now you have all of the information you need to get a three-person mortgage!
Remember, not every mortgage broker will be able to offer you what you want, so be sure to choose the right mortgage broker for your specialist needs.
Before you submit an application for a three-person mortgage, be sure to do your own credit search, consider what monthly payments you can afford, and what your mortgage deposit could be.