What is a joint mortgage?
With a joint mortgage, two or more people can pool their resources and apply for a home loan together. Each person who applies is equally responsible for repayment and for abiding by all terms of the loan. It’s important to note joint borrowing doesn’t mean joint ownership. A person can be included on the home’s mortgage but not be included as an owner on the title.
Who can apply for a joint mortgage?
Any combination of borrowers can apply for a joint mortgage, including spouses, domestic partners, siblings, a parent and child, business partners, or a group of friends. Each applicant must be at least 18 years old. According to Christy Bieber of The Ascent, lenders typically limit the number of co-borrowers on a mortgage to four, although this can vary.
How does a joint mortgage application work?
When multiple people apply for a mortgage loan together, the lender will scrutinize each applicant’s assets, income, debt, credit, and other factors. If one or more applicant has poor credit, Bieber notes this could make the lender less likely to approve the loan or extend favorable terms. However, this can also work in the opposite direction, with one person’s superior credit resulting in better terms for everyone.
Is co-signing for a loan the same as a joint mortgage?
Getting a co-signer for a loan isn’t exactly the same as co-borrowing with a joint mortgage. A co-signer with more established credit may sometimes be required if the primary borrower can’t qualify for the loan on their own. Bankrate's, Kellye Guinan points out a co-signer simply backs the loan and is only responsible for making mortgage payments if the primary borrower doesn’t make them. In comparison, co-borrowers for a joint mortgage are fully and identically responsible for repaying the loan from beginning to end.
Can a joint mortgage be dissolved?
With a joint mortgage, all borrowers must be equally committed to following the terms of the mortgage. But what if one or more people want out or are no longer willing to hold up their end of the agreement? In MoneyTips, Josh Richner notes a few possible solutions. In some cases, selling the home and dividing the proceeds is the right move, as long as there’s enough equity to avoid a loss. If they qualify, one or more partners could also refinance the home in their names or seek a loan modification, removing the partner who no longer wants to be involved.
A joint mortgage can be a valuable tool for achieving homeownership. However, it’s especially important to make sure each co-borrower is trustworthy, financially stable, and committed to similar goals. A mortgage is a serious long-term commitment that requires careful consideration before moving forward — and this is especially true when more than one person is involved.