First Time Buyer Joint Mortgage

Who is classed as a First Time Buyer?

It’s someone who hasn’t owned a property before – they’ve never bought a property or inherited one.

How do joint mortgages work for First Time Buyers?

As an example, if you didn’t own your own house and I didn’t own my own house, we are First Time Buyers, the lender will look at our joint incomes and work out how much we could borrow together. We would then put in a similar deposit each and purchase the property together.

Because you’re a First Time Buyer, some lenders will give you additional discounts that aren’t available to home movers or people who are remortgaging. There can be certain benefits for First Time Buyers that other people don’t get.

My partner is a First Time Buyer, but I’m not – what are my options?

Some lenders would still allow you to get a First Time Buyers discount or package.

Where it does fall down is stamp duty. The majority of First Time Buyers would not pay stamp duty. There are certain limits which I won’t go through at this stage, but stamp duty is simply a tax on buying a property. First Time Buyers in the main don’t pay that tax unless the property value is over a certain amount.

But you can only ever be a First Time Buyer once. So if you had owned your property and sold it a few years ago and we were now buying together, unfortunately because you’ve had a property before you would have to pay stamp duty – because you only get that benefit once.

Do both buyers have to be First Time Buyers? Do couples lose First Time Buyer status if one partner bought in the past?

Exactly that. Yes. If I’m a First Time Buyer and you’ve already owned a property unfortunately, neither of us get the benefit with the stamp duty.

We can still get a First Time Buyers discount from a lender, but we certainly don’t get stamp duty for free. For there to be no stamp duty, both of us need to be First Time Buyers, so neither of us has owned a property.

What does being joint tenants or tenants in common mean?

This is how the property is actually held. So if you and I were married, we would most likely buy the property as joint tenants. Joint tenants means that if I were to die, my share of that property would go to you because it’s jointly owned.

If it’s tenants in common, the property is in effect split up. If there are two of us, I own 50% and you own 50%. The tenants in common might just be friends buying a property, using both our incomes to buy more expensive property.

If we bought as tenants in common and I died, my 50% of the house would go to my next of kin rather than you. Equally, if you died your 50% of the property would go to your next of kin rather than to me.

Can I get a joint mortgage with a guarantor?

You certainly can. It’s a bit of an old fashioned term these days. Previously when you used a guarantor, it meant that if you couldn’t afford your mortgage, the guarantor would step in and pay.

These days it tends to be called Joint Borrower Sole Proprietor rather than guarantor. It means that the person helping you out goes on the mortgage, but not on the property deeds.

If there are any missed payments, it is the responsibility of the person who bought the house and also the guarantor to make sure that mortgage is paid. But that guarantor is not on the deeds, for stamp duty reasons. A number of lenders offer this kind of mortgage and we recorded another podcast on Joint Borrower Sole Proprietor and in certain cases it is fantastic and works like a dream.

I did one a while ago where the applicant was on a fast track with their income but couldn’t get the property they needed. We did a Joint Borrower Sole Proprietor and within two years their income had increased dramatically. They were then in a position where they could get rid of the Joint Borrower Sole Proprietor and have the mortgage on their own – but it got them into the house they needed in the right area for their employment.