3 Person Mortgage

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3 Person Mortgage

Simon Deeming explains how a three person mortgage works.

Can you have a three-person mortgage? Can three people be on the same mortgage?

We’ll break that down in a moment. But first I should explain that there’s not a product available called a three person mortgage. There are just standard mortgages which you can apply for jointly with one, two or three people.

So, yes, you can have three people on a mortgage. You can get a mortgage with more than two people named as the borrowers and add a third person. This technically changes the terms you originally agreed with the lender – so you’ll need to remortgage onto a new deal and add the third person at that point.

If you’re still inside a specified fixed rate or tracker period, you’ll need to be mindful of early redemption charges. There’s likely to be a product fee for the new mortgage you take out together.

Three people can jointly own a house. If you opt to own it jointly, each person will own an equal share. From a legal perspective, the owners would be described as ‘jointly and severally liable’, which means you’re each responsible for the debt on the property.

If you want to split the value of the house in unequally sized shares, you’ll have to buy as tenants in common. Your solicitor can help you decide on this and set it up. Your mortgage will reflect your approach to sharing the property value.

Can you get a mortgage with friends?

Yes. There’s no stipulation by lenders or UK mortgage rules that you must get a mortgage with someone you’re related to. Just bear in mind that buying a house is obviously a huge financial commitment, and means you’ll be tied to friends you buy a property with.

Think carefully about who you get involved with and what would happen practically if one of you wanted to sell but the others didn’t. Consider the implications of falling out with each other, or if one of you becomes unable to pay your share of the mortgage.

How do mortgages with three or more applicants work?

It’s just the same as a standard mortgage. The lender assesses your joint application to see whether you can afford the repayments. If they issue an offer, you’ll apply in the same way, and the processing and completion is identical to buying on your own or with one other person.

You can choose whether to fix the interest rate or choose a base rate tracker. Just like with normal mortgages, you can set the term of the mortgage to a length and monthly repayment that suits you.

The only difference is that there are more of you to add to the mortgage, which may take extra time in terms of admin. You’ll be pooling your resources to make the property purchase happen.

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We’ll find you a solution that covers your needs, circumstances and preferences and do all we can to make your mortgage application process as smooth as possible.

What deposit do you need and how much can you borrow with three people on a mortgage?

It’s the same as with one or two applicants. You need at least 5% deposit and the bigger the deposit you have, the better the rate you’ll be able to secure. Lenders tier their prices according to the deposit as a percentage of the property value.

What documents do you need with three people on the same mortgage?

There are no differences in which documents you need to supply whether you’re borrowing as an individual or a group of 3, you just need more because there are three of you. Each of you will need to verify your identity, prove your income and have a credit check. We offer an online portal through which you can upload pictures of your ID, bank statements and pay slips – or accounts if you’re self-employed.

If the deposit isn’t just from savings, you might need to provide evidence of where the funds have come from. If it is from a parent or grandparent, you’d need a gifted deposit letter. That’s the case for each applicant where the deposit isn’t just from savings.

Does it cost to add someone to a mortgage?

Yes, although it’s not a straightforward charge or fee for adding a person to the mortgage. Let’s say you’ve already got a mortgage with two people or just one person on it. You’d need to remortgage to a new deal, and that might incur an early redemption charge for your current fixed rate product, and/or an admin fee for the new one.

Whilst it’s possible to amend the title deeds to the property yourself, it can be complicated. So it’s worth paying for a conveyancing solicitor to help you with the legal work.

Do you pay stamp duty when adding someone to a mortgage? Are there any other costs involved?

You’ll need to get the title deed to the property amended to reflect the change of ownership, which is referred to as a transfer of equity. You’re transferring some of the property’s value to another person.

That transaction can mean the person being added to the deeds would need to pay stamp duty, but it depends on where you live in the UK and what the stamp duty thresholds are. It’s another good reason to ask a conveyancing solicitor to help you with legal paperwork.

We don’t get involved in advice on that. I think we’ve covered the other costs, but again, you might need to pay a charge to exit your existing mortgage and an admin fee to set up the new one.

What are the pros and cons of having three people on a mortgage?

You might be able to pool your savings and put a bigger deposit together. That could mean buying a bigger house or flat than you’d be able to on your own.

The two highest earners’ incomes are usually factored into the lending decision, so if you don’t earn as much as the others, it allows you to buy a property that you otherwise couldn’t.

Having a bigger deposit could also potentially mean you qualify for lower interest rates. If you’re able to use two higher incomes, you could potentially borrow more, as well.

But just to go back on things I mentioned already, getting a mortgage is a huge financial commitment. Whether you’re planning to live together or rent out to tenants, your credit score will be linked to your co-applicants’ credit scores. Any negative activity on their files could damage your own credit history – and impact your ability to borrow money in future.

That’s just another thing to think about. You also need to think carefully about what would happen if someone wants to sell or if you fall out. How would you reconcile any differences? What would you do about selling the property if one of you wanted to?

You’re all responsible for the debt as well. If one of you can’t contribute, it’s down to the others to cover it. So there are a few additional complications.

Which lenders offer mortgages to groups of three or more people? Are there many?

Products and lenders vary greatly. Not all of them will be right for your specific circumstances. Talk to an impartial broker to help you quickly find the right mortgage and lender for you and your circumstances.

If they don’t ask you to clarify, make sure you explain exactly what you want so the broker can come back with a tailored recommendation. They should tell you what to expect and then you can make an informed choice.

How do you get a multi-applicant mortgage or a mortgage for three people? How can a mortgage broker help?

As your broker, we’ll help you get a multi-applicant mortgage if it’s the right thing for you. We guide you through the initial conversations about borrowing together, through to completion on a property purchase and finally getting your keys. Ultimately, that’s what it’s about.

Researching mortgages and gathering information takes time and can be frustrating, especially when you’re doing something a little unusual, like buying a property with more than two mortgage applicants.

Using a broker can reduce that time – because it’s our job to know about products from a variety of lenders. That’s one advantage of coming to us. We might also be able to save you money, because we have access to a wider range of mortgage lenders and insurance providers than those on the high street, which gives you more choice.

Buying a house can be stressful and highly emotional. You might have become attached to a property and pictured your entire future there. Getting a good broker on your team can help ease that journey into the new property.

We take on so much legwork for you from a financial perspective, but also all the other nuts and bolts of the buying process. And remember, we’ve done this hundreds, if not thousands of times for other clients, so we can guide you through everything. It can take a lot of weight off your mind.

We’re a multi award winning broker with loads of experience to draw on, and we’re rated five star on Google and Trustpilot with over 500 reviews.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Initial Consultations are completely free of charge. There’s no obligation to proceed and our broker fee will only become payable if we proceed to a full application. The precise amount of the fee will depend on your circumstances and will be discussed and agreed with you at the earliest opportunity. Typically, in most cases, our fee will be £495. We charge £595 for bridging and adverse credit cases; and £995 for Later Life Lending.

Mortgage Style Ltd is registered in England and Wales. Registered Number 5743648. Registered Office: Elm Tree Farm Estate, The Sheepway, Portbury, Bristol, BS20 7TF.

Mortgage Style Ltd, trading as Mortgage Style, is an appointed representative of the HL Partnership Limited, which is authorised and regulated by the Financial Conduct Authority.