4 Person Mortgage
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4 Person Mortgage
Carolyn Dunion explains how a four-person mortgage works.
Can I get a mortgage with four people? Can a house be owned by four people?
Very simply, yes. Each lender will have their own criteria on how many people can be on a mortgage – but usually four is the upper limit. As long as the lender is happy with four, there’s no problem.
As always, the mortgage and the property ownership must match. If you’ve got four people on the mortgage, you need to have four people on the title.
Can you get a mortgage with friends?
Yes, absolutely. There’s no restriction as to the relationship between the four people applying.
How do mortgages with four or more applicants work?
It’s essentially the same as any other mortgage, whether it be in a sole name or joint names, where there’s more than one person involved. The criteria with four parties doesn’t really change.
But, of course, you’ve got four people to navigate through the process – so four times the fun or four times the trouble, depending on how you look at it.
We’ll need four sets of documents, for example. Everybody’s got to identify themselves and prove their circumstances. But other than that, there’s no real change.
What deposit do I need and how much can you borrow with four people on a mortgage?
Generally speaking, the deposit rules are much the same, regardless of how many people are involved. You need a minimum of 5% at least, but you would have to qualify for a 95% mortgage if you’ve only got 5%.
With more people involved, there’s more chance of somebody having an imperfect credit rating, and that’s taken into consideration. You would hope that with four people that you might have a larger deposit, which is a huge benefit.
In terms of the borrowing, it will be dependent on the income and credit commitments of all four people. With four people involved, you might be able to get a bigger property than you would otherwise, by taking into account four different incomes.
What documents do you need with four people on the same mortgage?
It’s exactly the same. You’ll need ID, proof of address, proof of income, bank statements and evidence of the deposit funds, depending on where they are. If they are in your bank account, you would just need your most recent statement. But each person will need to provide those documents.
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Does it cost to add someone to a mortgage?
Yes, if the mortgage is in existence already. If you’ve got a mortgage and a property and you want to add someone to that, there will be a legal cost to add them to the mortgage and the property title. The mortgage lender would also have to agree.
If you’re buying a property from scratch with a group of four people, this is all part of the purchase process. A solicitor might charge slightly more because there’ll be more admin involved in a four person mortgage, but it should be fairly negligible.
It’s when you add people to a mortgage or property that’s already in place that there will be an additional legal cost.
Do you pay stamp duty when adding someone to a mortgage?
If you’re buying from scratch with a group of four people, the stamp duty – or Land and Buildings Transaction tax, as it’s called now – will be dependent on the purchase price and the status of the people applying.
That will be calculated at the point of purchase, regardless of how many people are involved. If you’re adding somebody on, it really depends on their circumstances and what they’ll financially gain from joining the mortgage.
You need a solicitor to give you that information, but there’s a chance that the tax would apply.
What are the pros and cons of having four people on a mortgage?
The big advantage is that you’re leveraging the income of four people, which gives you the opportunity to buy a bigger property.
You’re pooling four lots of resources, so you might end up with a bigger deposit, which is great. The big disadvantage, of course, is that with four parties involved there could be disagreements at some point. The chance of there being an issue between the buyers is just that much greater.
Which lenders offer mortgages to groups of four or more people? Are there many?
There are plenty. The vast majority of mainstream lenders will consider this at any one time. Obviously, criteria changes, so it’s worth checking who’s available. But you won’t be paying an unnecessary premium in interest rate for this type of transaction.
How do I get a multi-applicant or four-person mortgage? How can a mortgage broker help?
Very simply, we’re there to find the best product for the circumstances. That’s true for all clients. It’s particularly beneficial when you’ve got four parties involved, because you‘ll have a central source coordinating everything.
It’s also useful to have somebody navigating you through the things to consider. For example, have you discussed the exit strategy for this property? Are you all on the same page? We can ask those slightly awkward questions before you’ve actually committed to it. In this scenario, your mortgage advisor is invaluable.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
