Can I add my partner or spouse to my mortgage?
With many people getting married later in life or simply choosing to get their first house on their own, it comes as no surprise that the question of adding a partner or spouse onto a mortgage comes up time and time again. This article provides information on the process of adding someone to a mortgage, the legal procedures and expenses involved, and alternatives to adding a partner to a mortgage.
Adding a Partner to a Mortgage
The first step to take when considering adding a partner to a mortgage is to talk to the current mortgage lender. The lender will require the partner to undergo credit and affordability checks to ensure that they can keep up with repayments. The lender may charge a fee for this service, and they are under no obligation to add the partner if they do not pass the checks.
If the lender agrees to add the partner to the mortgage, a solicitor will be needed to provide legal advice on how to divide ownership of the house. The solicitor’s fee should be taken into account when making a decision.
Ways Properties are Shared
The two ways properties are normally shared are:
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Tenants in common: In this scenario, the partners decide on the percentage each of them will own of the house. It doesn’t have to be 50/50, but in the event of death, the deceased’s portion of the house will pass onto a next of kin, not necessarily the other partner.
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Joint tenants: In this scenario, both partners have equal ownership of the house, and if one of them passes away, their shares will automatically pass onto the other.
If the lender denies the request, there are still ways to add the partner to the mortgage. It may be worthwhile to speak to multiple lenders to see who can help. The partners could also remortgage the house with another lender and apply together for a joint mortgage, which may result in getting a better deal on the mortgage.
However, by applying for a joint mortgage, the credit score of both partners will become associated. If one partner has a bad credit score, it can reflect badly on the other partner’s score, even if theirs is good.
Alternatives to Adding a Partner to a Mortgage
Another option is for the partner to move in and pay rent to cover the cost of living and utility bills. This way, if the partners break up, the partner who moved in has no legal or monetary claims to the home.
Gifted Deposit for First-Time Buyers
If you are a first-time buyer struggling to come up with a deposit for a mortgage, you may be considering receiving a gifted deposit from a family member or friend. A gifted deposit is a sum of money given to you towards, or fully covering, the deposit amount for your mortgage. It is not a loan, and the person giving you the money does not have any stake in your property.
Requirements for Using a Gifted Deposit
However, there are certain rules and requirements to follow if you are using a gifted deposit to purchase a house. First, you must prove that the money is a gift, without expectation of repayment. You will need to obtain a Gifted Deposit Letter signed by a witness, which must include the giver’s name, your name, the total sum given, a statement that it is a gift, a statement that the gift has no commercial interest, confirmation that the gift giver has no financial or commercial stake in the property, and confirmation that the gift giver is financially solvent and able to provide the gift.
It is recommended that the person providing the gift is a relative, such as a parent, sibling, or grandparent, as many mortgage lenders prefer this. However, anyone can gift you a deposit in theory. The gift giver will also need to prove that they have the funds to give you
Common questions about adding a partner to your mortgage
The criteria for adding a partner to a mortgage will depend on the specific lender, but in general, they will need to undergo credit and affordability checks to ensure they can keep up with repayments. The lender may charge a fee for this service, and they are under no obligation to add the partner if they do not pass the checks.
If the lender agrees to add the partner to the mortgage, a solicitor will be needed to provide legal advice on how to divide ownership of the house. The two ways properties are normally shared are: tenants in common and joint tenants. In the tenants in common scenario, the partners decide on the percentage each of them will own of the house. In the joint tenants scenario, both partners have equal ownership of the house.
If the lender denies the request, there are still ways to add the partner to the mortgage. It may be worthwhile to speak to multiple lenders to see who can help. The partners could also remortgage the house with another lender and apply together for a joint mortgage, which may result in getting a better deal on the mortgage.
A gifted deposit is a sum of money given to a first-time buyer towards, or fully covering, the deposit amount for their mortgage. It is not a loan, and the person giving the gift does not have any stake in the property. This can be a useful way to help first-time buyers get onto the property ladder if they are struggling to come up with a deposit.
To use a gifted deposit to purchase a house, you must prove that the money is a gift, without expectation of repayment. You will need to obtain a Gifted Deposit Letter signed by a witness, which must include the giver’s name, your name, the total sum given, a statement that it is a gift, a statement that the gift has no commercial interest, confirmation that the gift giver has no financial or commercial stake in the property, and confirmation that the gift giver is financially solvent and able to provide the gift. Additionally, the gift giver will need to provide proof of funds and photo ID, and two forms of address evidence.
If you are using a gifted deposit as a first-time buyer, be aware that if the gift giver dies within seven years of providing you the gift, you may have to pay inheritance tax on it. Additionally, the gift giver cannot be seen to be ‘depriving themselves of capital,’ which could cause complications if they qualify for state benefits. It is important to follow the rules and requirements of using a gifted deposit, and it is recommended to speak to a professional mortgage adviser for guidance on the best way to proceed.
