Adding a partner to your existing mortgage can be a rewarding step towards shared financial responsibility and stability. However, your home is likely your most significant asset, so adding a partner to your mortgage is a consideration which shouldn’t be taken lightly.
Whether you’re newlyweds, long-term partners, or friends looking to share ownership, here’s everything you need to know about adding a partner to your mortgage.
Access free mortgage advice to help you plan your next steps
Can I add another person to my mortgage?
When you take out a mortgage, you become the legal owner of the home, alongside any co-borrowers. You can add another person to your mortgage, and this means they will share the responsibility of the loan repayments and also have a stake in the property’s ownership.
Related: Three ways your home can earn its keep
How to add a partner to your mortgage
Check your mortgage terms
You should start by reviewing the terms of your current mortgage agreement. Some mortgages may allow you to add a partner with minimal charges, while others may require refinancing or even a new application.
Complete a financial assessment
Lenders will need to assess your partner’s financial situation to make sure that they can afford their share of loan repayments. This includes their credit history, income, and any outstanding debts to determine their eligibility for the mortgage. This process will help your lender gauge the risk of adding a new borrower.
Seek legal advice
Sharing a mortgage requires a great deal of trust, so it’s important to understand the legal implications of adding someone to your mortgage. You’ll need to decide whether you want a joint tenancy (where the ownership is 50/50) or a tenancy in common (where ownership shares can be unequal).
Related: What happens once I’ve paid off my mortgage?
The financial implications of adding a partner to your mortgage
Income and affordability
Adding a partner who has a stable income and a good credit score can improve your borrowing capacity. Lenders typically assess both incomes when calculating how much you can borrow, so this could open you up to more favourable deals.
Credit and risk
On the flipside, if your partner has a poor credit history, this could affect the interest rate you qualify for, or it could result in your lender rejecting your application.
Tax considerations
There may be Stamp Duty implications if adding a partner means transferring equity. You should consult with a tax adviser for clarity on any potential costs.
Legal protections
It could be a good idea to have a legal agreement drafted that outlines each person’s financial responsibilities, share of ownership, and what happens if one partner wants to sell or buy out the other.
Insurance policies such as life insurance or critical illness can also safeguard your mortgage payments in case of unexpected events.
Related: Early repayment charges explained
Refinancing options
Depending on your current mortgage terms, adding another person to your mortgage might help with refinancing. This process involves applying for a new loan based on your combined financial profiles, so adding a partner could place you in a stronger position.
Costs involved
It’s important to factor in fees such as valuation costs, legal fees, and possibly early repayment charges from your existing lender.
Practical considerations
Communication
Open and clear communication is crucial throughout the process of adding a partner to your mortgage. This ensures that both parties understand their responsibilities and financial commitments, which means you can avoid later disputes and legal issues.
Future plans
Make sure to discuss your long-term goals and consider how adding a partner to your mortgage aligns with these plans. Whether it’s starting a family, career changes, or future property investment, upfront clarity can help you prevent future complications.
Speak with an expert
Every situation is unique, and consulting with mortgage advisers, financial planners, and legal experts will provide tailored guidance suited to your specific circumstances.
If you’re thinking about adding a partner to your existing mortgage, we can put you in contact with an experienced mortgage adviser who will help you carefully weigh up the pros and cons based on your unique circumstances to determine your best course of action.
For more advice and guidance, visit our mortgage FAQs or contact your local Martin & Co branch today.
