All you need to know about joint homeowner loans
A Guide to Joint Homeowner Loans
If you share your mortgage with your partner, you could apply for a loan together. Read on to discover all you need to know about joint secured loans.
Joint homeowner loans: the basics
A joint homeowner loan allows you and your mortgage partner to borrow money against your home. As you’re both responsible for the paying mortgage, you’ll both be liable for the homeowner loan repayments.
You can only apply for a joint homeowner loan with whoever you share your home with. It’s usually couples who apply for a joint loan, but there’s nothing stopping you from applying for a secured loan with a family member or friend – you just need to share a mortgage together.
Any finance tied against a property owned by two people is, by default, a joint loan. Since any missed payments could put your home at risk, everyone who’s named on the mortgage will need to agree to the loan.
Applying for a joint loan
Double the applicants, double the checks. When it comes to making a joint application for a secured loan, the lender will check both credit files before approving the loan. You’ll also both need to provide documents that prove your shared income, such as wage slips and bank statements.
And perhaps most importantly, you’ll both need to sign the credit agreement and the Legal Charge accepting the charge against your home. It’s essential you’re both on the same page and are happy to proceed with the loan you’re offered. Remember, you’ll be equally responsible for making sure the loan is repaid – even if only one half of the couple intends to make the repayments.
Joint loans and your eligibility
Applying for a homeowner loan together can boost your eligibility. As the loan is shared, lenders feel more confident that you could comfortably afford the repayments between you. Unless one of you is unemployed or a homemaker, your combined household earnings will be much more attractive to lenders than a sole income. Your joint affordability could also improve your eligibility for a larger loan.
If you have a bad credit score, a joint application could improve your chances of being accepted for a secured loan. While lenders will review both credit scores during the application process, they will ultimately base their decision on whoever has the strongest credit score.
Will applying for joint finance hurt my credit score?
Making any joint application for finance means your credit files become linked. This means that any lenders looking at your credit report can also see your partner’s history, which could impact how they view you. However, since you already share a financial product in the shape of your mortgage, applying for a secured loan together won’t change anything.
Applying for any finance – alone or with a partner – can temporarily affect your credit score. However once you show that you can manage the repayments on time, it should bounce back relatively quickly.
Joint liability explained
When you apply for a joint loan, both of you will need to sign a credit agreement. With this in mind, you both agree to take equal responsibility for all the repayments.
If you’re the highest earner, you might decide to cover all the repayments yourself. However, if something happens which makes this difficult (like a redundancy), your partner will be expected to cover the repayments. That’s why, before you apply, it’s important to consider whether you can both manage the payments alone should the worst happen.
Missing a payment towards a joint loan will affect both of you. It will appear on both of your credit reports and affect your credit equally. Plus, since you share your home, repeatedly missing repayments will mean that your home is at risk of repossession.
Before you apply for a joint secured loan, it’s vital you can trust your loan partner. If you’ve had trouble with shared finances in the past, a joint loan might not be right for you.
Benefits of a joint secured loan
Making a joint application for a secured loan has its advantages. Here’s how a joint loan could benefit you:
You could borrow more
A larger shared income could mean you could borrow a larger sum of money. Due to your combined finances, your affordability will shoot up. In other words, you can both afford higher repayments with a shared income. That means you could be eligible to borrow a larger amount than you could without a partner.
It could boost your eligibility
Has your credit score suffered a few knocks? If your partner has a stronger credit score, applying for a joint loan could strengthen your chances of being accepted for finance.
Joint secured loans made simple
At Evolution Money, we make it our job to take the hassle out of applying for finance. If you and your partner are interested in a joint loan, we’ll make sure we offer a loan that suits you both. Whether you both have good or bad credit, we’ll find a suitable joint loan that helps you put your plans in motion.
For a typical loan of £30,000.00 over 120 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £598.34.
Including a Product Fee of £2,400.00 (8% of the loan amount) and a Lending Fee of £807.00, the total amount repayable is £71,800.20.
Annual Interest Rates ranging from 11.88% to 29.38% (variable). Maximum 50.00% APRC. The loan must be paid back by your 70th birthday. Read more.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
