Remortgage as Joint Applicants

How Joint Remortgage Applications Work

When you remortgage as joint applicants, both borrowers are named on the mortgage and are equally responsible for the repayments. This means that if one person cannot pay, the other is liable for the full amount. Lenders assess both applicants' incomes, credit histories, and financial commitments to determine how much they are willing to lend.

Joint applications are not limited to married couples. You can apply with a spouse, civil partner, unmarried partner, friend, family member, or anyone else you wish to buy property with. However, the relationship between applicants can affect certain legal and tax considerations.

Most lenders calculate borrowing capacity based on a combined income multiple. For example, if both applicants earn £30,000 per year, a lender offering 4.5 times income could lend up to £270,000 on a joint basis, compared to £135,000 for a sole applicant.

There are two main types of joint ownership:

• Joint tenants — both parties own the property equally, and if one dies, the property automatically passes to the survivor
• Tenants in common — each party can own a different share, and each person can leave their share to whoever they choose in their will

Your choice of ownership structure does not affect the mortgage itself, but it has significant implications for inheritance, tax planning, and what happens if the relationship breaks down. A solicitor can advise on which arrangement best suits your circumstances.

Advantages of Remortgaging as Joint Applicants

Applying for a remortgage jointly offers several significant benefits compared to applying as a sole borrower.

Higher borrowing capacity: Two incomes give you access to larger mortgage amounts. This is particularly helpful if you need to raise additional funds for home improvements, debt consolidation, or buying out a third party.

Better rates: A higher combined income relative to the mortgage amount means a lower loan-to-value ratio, which typically unlocks more competitive interest rates. Lenders reserve their best deals for lower-risk borrowers, and two incomes help demonstrate that the mortgage is comfortably affordable.

Shared responsibility: With two people contributing to the repayments, the financial burden is divided. This can provide a safety net if one person experiences a temporary reduction in income due to illness, redundancy, or career changes.

Stronger application: Joint applicants may have a better chance of approval, particularly if one person has a slightly weaker credit profile. A partner with a strong income and clean credit history can help offset concerns that a lender might have about the other applicant.

However, it is important to remember that joint borrowing also means joint liability. If one person stops paying, the other must cover the full amount. Both borrowers' credit scores are affected by the mortgage performance, so missed payments will impact both parties.

Before committing to a joint remortgage, have an honest conversation about your financial situations, spending habits, and long-term plans. Being open about debts, savings, and financial goals helps avoid unpleasant surprises during the application process.

What Lenders Assess for Joint Applications

When you apply to remortgage as joint applicants, lenders carry out a thorough assessment of both borrowers. Understanding what they look at can help you prepare and improve your chances of approval.

Combined income: Lenders add both applicants' incomes together to calculate borrowing capacity. This includes basic salary, regular overtime, bonuses, commission, and any other reliable income streams. Some lenders also consider benefits, investment income, and rental income from other properties.

Individual credit histories: Both applicants' credit files are checked. If one person has adverse credit, such as defaults, county court judgements, or a history of missed payments, this can affect the application. Some lenders weight both credit scores equally, while others focus more on the primary earner.

Existing commitments: All debts and financial commitments for both applicants are considered. This includes credit cards, personal loans, car finance, student loans, child maintenance, and any other regular outgoings. High levels of existing debt can reduce the amount you are able to borrow.

Employment status: Lenders prefer stable employment. If one applicant is self-employed, a contractor, or on a probationary period, additional evidence may be required. Self-employed applicants typically need to provide two to three years of accounts or tax returns.

Deposit and equity: The more equity you have in the property, the better your loan-to-value ratio and the more favourable the rates available to you. Lenders assess the property's current value and the outstanding mortgage balance to calculate LTV.

Stress testing: Lenders stress test the mortgage to ensure you could still afford repayments if interest rates were to rise. This involves assessing affordability at a higher rate than the one you are actually applying for, typically around 7-8%.

If one applicant has issues that could weaken the application, a mortgage adviser can help identify lenders with more flexible criteria or suggest steps to strengthen your position before applying.

Common Reasons Couples Remortgage Together

Couples remortgage for a variety of reasons, and applying jointly can make achieving your financial goals more straightforward.

Securing a better rate: When your current mortgage deal expires, you will typically move to the lender's standard variable rate (SVR), which is almost always higher. Remortgaging together to a new fixed or tracker rate can save hundreds of pounds each month.

Releasing equity for home improvements: Many couples release equity from their property to fund extensions, renovations, or conversions. Two incomes can make it easier to borrow the additional funds needed while keeping the monthly payments manageable.

Debt consolidation: If you have accumulated debts on credit cards, personal loans, or car finance, consolidating them into your mortgage can reduce your overall monthly outgoings. However, this means securing unsecured debts against your home, which carries risks. You should always seek independent advice before doing this.

Adding a partner to the mortgage: If you originally bought the property alone and now want to add a partner, remortgaging provides an opportunity to do so. This typically involves a transfer of equity alongside the remortgage.

Changing the mortgage term: You might want to shorten the term to pay off the mortgage sooner, or extend it to reduce monthly payments during a period of financial pressure. Remortgaging as joint applicants gives you flexibility to restructure the deal.

Capital raising: Whether it is to help a child with a house deposit, fund a business venture, or cover a large expense, remortgaging together to raise capital is a common reason for joint applications.

Whatever your reason, it is important to compare the total cost of remortgaging, including fees, charges, and interest, against the benefits you expect to gain. A qualified mortgage adviser can model different scenarios to help you make an informed decision.

What Happens If One Applicant Has Bad Credit?

One of the most common concerns for joint applicants is what happens if one person has a less-than-perfect credit history. The short answer is that it depends on the severity of the issue and the lender you approach.

Minor credit issues, such as a single missed payment from several years ago, may have little impact on your application, especially if the other applicant has a strong credit profile. However, more serious issues like defaults, CCJs, IVAs, or bankruptcy can significantly reduce your options.

Here is how different levels of credit issues might affect your joint application:

• Minor issues — late payments, low credit utilisation, or recently opened accounts may simply mean you do not qualify for the very best rates, but mainstream lenders should still consider you
• Moderate issues — one or two defaults, particularly if they are older and have been satisfied, may push you towards specialist lenders who charge slightly higher rates
• Serious issues — active CCJs, IVAs, or recent bankruptcy will significantly limit your options, and you may need a specialist broker to find a suitable lender

In some cases, it may be worth considering whether one person should apply as a sole applicant if their credit profile is significantly stronger. This avoids the negative impact of the other person's credit history, though it also means the application is based on a single income.

Some lenders offer what is known as a joint borrower sole proprietor arrangement, where both incomes count for affordability but only one person is on the property deeds. This can be useful in certain family situations, though it is not available from all lenders.

If credit issues are a concern, speak with a specialist mortgage adviser before applying. They can review both credit files, identify the most suitable lenders, and advise on any steps you can take to improve your chances of approval.

Protecting Your Interests as Joint Borrowers

When you remortgage jointly, both parties take on significant financial commitments. Taking steps to protect your interests from the outset is essential, regardless of how strong your relationship is.

Cohabitation agreement: If you are not married or in a civil partnership, a cohabitation agreement sets out what happens to the property and mortgage if you separate. Without one, disputes can be extremely costly and stressful to resolve.

Declaration of trust: This legal document records each party's financial contribution and ownership share. It is particularly important if you are contributing different amounts to the deposit, mortgage payments, or household costs.

Life insurance: Joint life cover ensures that if one borrower dies, the mortgage can be repaid in full. Without it, the surviving partner may struggle to maintain the repayments alone. Many lenders strongly recommend life cover, and some require it as a condition of the mortgage.

Critical illness cover: This pays a lump sum if either borrower is diagnosed with a specified serious illness, providing funds to cover the mortgage or adapt to changed circumstances.

Income protection: If one borrower is unable to work due to illness or injury, income protection insurance provides a regular income to help cover mortgage payments and living expenses.

Wills: If you own the property as tenants in common, your share does not automatically pass to the other owner when you die. You need a will to specify who inherits your share. Even if you are joint tenants, having an up-to-date will is good practice.

These protections may seem unnecessary when everything is going well, but they provide vital security if circumstances change. The cost of putting them in place is typically modest compared to the potential financial consequences of being unprotected.

A mortgage adviser or solicitor can guide you through these protections and help you understand which ones are most relevant to your situation. Many advisers can also arrange insurance products alongside your remortgage, making the process straightforward.