Change is the only constant in life. So, it is no surprise if your financial condition changes years after taking a mortgage.
You may have got married and want to add your spouse to your mortgage. Or, your parents may be willing to share the burden of repayment with you. In fact, in 2023, one in every four parents helped their children with mortgage repayments.
That brings us to the burning question – can you add someone to a mortgage? The answer is a resounding “yes!”
It’s just a matter of a few steps – you can either add the names of the interested parties to the mortgage or remortgage and create a joint mortgage account.
- Which option is more suitable for you?
- What are the pros and cons of adding someone to a mortgage?
- What is the complete process of this change to an existing mortgage?
We’ll answer all your queries and a lot more in this informational article, so read on…
Table of Contents
- Why Add Someone To Your Existing Mortgage?
- Can You Add Someone To A Mortgage?
- How To Add Someone To A Mortgage
- How To Add Someone To Your Existing Mortgage (Step-by-Step Process)
- Pros Of Adding Someone To A Mortgage
- Cons Of Adding Someone To A Mortgage
- Final Words
Why Add Someone To Your Existing Mortgage?
Managing a mortgage solo can be challenging, especially if your income has fluctuated or household expenses have increased.
With the current cost of living affecting households across the UK, expenses are rising rapidly, from soaring energy prices to higher grocery bills.
Given these financial pressures, some younger homeowners may contemplate adding a parent to the mortgage to alleviate ongoing costs.
Furthermore, over the course of a typical 25-year mortgage, changes in relationships may occur.
For instance, if you applied for a mortgage as a single individual, you might later end up in a committed relationship and wish to include your partner in the arrangement.
Can You Add Someone To A Mortgage?
As already mentioned before, you do have the option of adding someone to your mortgage as long as you meet the lender’s criteria and it is accompanied with a process called a transfer of equity to add the new borrower onto the title deeds.
This individual could be your spouse, partner, family member, or close friend. Regardless of the relationship, we recommend consulting your lender and requesting the addition of a participant to your existing mortgage or through the help of an experienced mortgage broker.
When incorporating a new name with your lender, they will conduct credit and income checks on your potential mortgage partner to assess their eligibility.
They are also likely to confirm that your mortgage partner will not reach retirement before the mortgage is fully repaid.
Importantly, primarily lenders may only allow adding somebody to a mortgage by applying through a new re mortgage application. This is an important consideration as if you are currently in a mortgage with early repayment charges, these may need to be paid to complete your desires.
Bear in mind, certain lenders may allow individuals to be added to the mortgage whilst not being added to the title deeds through a joint borrower sole proprietor mortgage product.
Other lenders may allow the new prospective mortgage partner to not reside at the property so will factor in there other living costs but they must be on the property title deeds.
How To Add Someone To A Mortgage
Option 1: Remortgage
Remortgaging involves switching your existing mortgage with a new one, and in this case, it will be a joint mortgage. You can apply for a joint mortgage with your current lender or get guidance from a mortgage broker.
We recommend collaborating with a whole-of-market broker, as they can connect you with a broader range of lenders.
They’ll also assist you in finding a suitable lender for your situation, which is crucial as your current lender might offer a higher quote compared to others in the market.
Moreover, going for a new mortgage means dealing with income and credit checks, property valuation, and essentially repeating the entire mortgage application process apart from providing documents around your deposit as that is the property.
Also, note that entering a new mortgage and transferring your debts might not be an option if you’re in a fixed-term agreement.
In such cases, you’ll either have to stick to the first method and approach your lender or wait until the fixed term ends.
Option 2: Consult Your Lender
You can approach your lender and inquire about a transfer of equity. This method is often viewed favourably by lenders as it involves repayments from two income sources instead of just one.
However, be aware that your lender may not approve your mortgage partner even if you’ve been a responsible borrower.
This may happen if the additional party has a low credit score, no source of income, or a history of repayment defaults.
Adding someone to a mortgage follows a process similar to applying for a new mortgage. Your lender will send over application forms and other legal documents.
Keep in mind that there might be fees involved in the equity transfer. You might also need a solicitor during the application for the conveyancing, and your lender might charge a processing fee for the request.
How To Add Someone To Your Existing Mortgage (Step-by-Step Process)
Step 1: Talk To Your Partner
Start by sitting down with your potential mortgage partner to discuss all the possibilities. This way, you’ll be ready for anything, whether it’s a lender denying the addition or dealing with paperwork hiccups on the lender or legal side.
Step 2: Get In Touch With Your Solicitor
Speaking of legal matters, it’s best to arrange a meeting with your solicitor before making any decisions.
You can have separate meetings with a solicitor to cover all bases, including future plans, in case things get a bit rocky, like a potential split.
Your conveyancing solicitor will lay out what you need to consider during the equity transfer.
They can help you make decisions, like choosing between a joint tenancy or tenants-in-common agreement, which determines property shares.
Step 3: Factor In The Costs
Besides the legal aspects, you must consider the fees associated with adding someone to a mortgage.
This can include the Early Repayment Charge (ERC), Stamp Duty tax, and registration fees.
You can check your last mortgage statement or repayment to determine how much ERC you might incur.
If it’s on the higher side, you might need to rethink remortgaging, even if your current lender won’t add your partner’s name to the existing mortgage.
Step 4: Reach Out To Your Current Lender
Once you’ve sorted out meetings and considered all the costs, it’s finally time to approach your lender.
Right off the bat, inquire about the possibility of adding someone to the mortgage and find out about associated costs.
Some lenders may offer a joint mortgage account for free, but it’s best not to have any expectations and be prepared for potential charges.
If all goes well, your lender will give the green light and provide the necessary application documents.
However, this does not confirm the addition yet, as your partner’s eligibility still needs to be assessed, with the process requiring their ID, credit, and income information.
After approval, you’re good to go. But if your partner does not meet the mortgage eligibility criteria, move on to the next step.
Step 5: Consult A Mortgage Broker
If ERC payments are too hefty or your current lender says no, consider reaching out to a mortgage broker. They’ll explore the mortgage market to find the best lender for your specific situation.
They can also help you weigh the pros and cons of different options. In some cases, they might advise paying the ERC by remortgaging to a different lender.
Step 6: Wrap Up The Legal Work
Once an agreement is reached, your solicitor will handle the legal side of things around the transfer of equity. They’ll guide you through the chosen property ownership, whether it’s a joint tenant or tenants-in-common arrangement, and oversee property ownership based on your decision.
Pros Of Adding Someone To A Mortgage
- Increased income for mortgage payments
- Additional support during complex legal procedures
- Assistance with ongoing costs and household expenses
- May help strengthen relationships
- Especially beneficial for young homeowners to give them certain benefits
Cons Of Adding Someone To A Mortgage
- Division of property value
- Potential net loss in initial deposit (non-recoverable)
- Financial vulnerability, especially if the relationship breaks down or if the property is sold in the future
- Potential relationship strain
While adding someone to a mortgage can provide relief in sharing financial responsibilities, it’s essential to weigh the consequences and make wise decisions.
After all, the division of property value, the risk of a net loss on the initial deposit, and the complications of joint tenancy agreements demand careful consideration.
Moreover, financial vulnerability during relationship changes and the necessity of credit and income checks add another layer of complexity to the process.
Yet, adding someone to an existing mortgage remains a common practice for couples and family members to share costs and ensure financial security.
However, before taking the plunge, we highly recommend consulting legal and financial experts for tailored advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.
All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.
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