How to Add Someone to an Existing Mortgage?

The world moves at a fast pace and we often find our lives change in equal measure.

Because our circumstances change over time, there may be many reasons why you might want to add someone to your mortgage.

But how do you go about doing that? Is it a straightforward process or is it as complicated as it sounds?

The answer is probably somewhere in between – this guide outlines how to add (and remove) someone to your mortgage.

Let’s explore further in this video we produced: 

Can I Add Another Person to My Mortgage?

Yes, you can in most cases however there are several factors that can prohibit you from adding an additional person to your mortgage.

Why Might You Want to Add Someone to Your Mortgage?

Paying for a mortgage on your own can be difficult, especially if your income has changed or the overheads within your house have changed.

The <cost of living crisis is now in full swing and households all over the UK are seeing costs escalating rapidly.

From increased energy prices to paying more on the weekly shop it is fair to say that many households are feeling their finances being squeezed.

This means that in some cases younger homeowners may wish to add a parent to a mortgage to help with the ongoing costs. 

Alongside financial changes, relationship changes also happen during the long term that we have mortgages (typically 25 years).

If you took a mortgage when you were young and single, you may find you settle into a committed relationship and wish to add your partner to your mortgage.

Is Adding a Person to a Mortgage a Good Idea?

Adding someone to your mortgage may seem like the best solution, but you should be aware it does come with some downsides.

First and foremost, there tends to be issues around your initial deposit. 

When you add someone to a mortgage you will automatically be giving them a right to a percentage of the property.

In most cases, this will be on a joint tenancy basis which entitles each owner to an equal split of the property value.

For example, if you bought a property on your own and add a new partner to your mortgage – if the deeds reflect joint tenants, you will be giving away 50% of your property value. 

This might seem like a good deal, especially as you will have an additional person contributing to the mortgage.

But when you consider the deposit, you put in initially (typically 10%) you will realise you’re immediately at a net loss when adding someone to a mortgage.

This is because the deposit won’t be recoverable in most circumstances under a joint tenants agreement.

To summarise, adding someone to a mortgage will help with sharing the ongoing costs, but it could leave you exposed financially if you break up with your partner or sell the property in the future.

How Do I Add Someone to My Mortgage?

There are two ways for adding another person to your mortgage.

Which option you choose will depend on your circumstances and the lender you currently borrow from.

Approach the Existing Lender

The simplest way to add someone to a mortgage is to approach your existing lender and ask them. 

In rare cases, lenders will allow you to add additional people to a mortgage although all will have different requirements around doing so.

Unfortunately approaching the existing lender route is the exception and most lenders won’t allow you to add someone to the mortgage without remortgaging the property with them.

Remortgage to Add Another Person

Remortgaging is the standard way to add someone to a mortgage. 

If you approach your existing lender, they will undertake the new application and assist with any questions you have along the way.

It isn’t advisable to just accept a remortgage offer from your existing lender. Instead, you should get a quote from them and then approach a broker.

A broker will compare the product you have been offered by your existing lender and compare it with other lenders to see if you’re getting the best deal.

The Remortgage Process

The remortgage process itself is just like a new mortgage application when adding another person and they will need to provide evidence of their income and pass a credit score.

If your circumstances have changed, you might find that you’re unable to remortgage without the additional person.

It is unfortunate that some people fall into what’s known as a mortgage trap and can’t remortgage due to a lack of equity or loss of income.

It is one of the reasons that Experian estimates that almost half (46%) of UK borrowers are now stuck on standard variable rate mortgages because they’re unable to remortgage when the term of their deal runs out.

Lastly, if you’re remortgaging during your fixed term, you might find that you have an early repayment charge.

Early repayment charges can be large (or non-existent) depending on your lender so it is vitally important to check your documents to see how much you will need to pay.

If you find you have an early repayment charge you should discuss this with your broker to establish whether it is best to remortgage now or wait for the fixed term to end.

For example, in some cases, simply waiting a couple of months can save you £10,000+ by avoiding the early repayment charge.

Association of Credit

When you take a finance agreement of any kind with someone else you will have an association of credit added to your credit file.

An association of credit allows lenders to see whom you’re borrowing money with.

In most cases having an association of credit isn’t a problem.

However, if the person you associate your credit with isn’t great at meeting financial obligations, their negative scoring can impact your overall creditworthiness.

This is because companies will view your finances as intertwined with the other person to some extent and as a result, you will be affected by their ability (or inability) to repay credit.

What Type of Tenancies Are There When Adding a Person to a Mortgage?

We briefly touched on this earlier in the article and it is, without a doubt, the most important consideration when adding another person to a mortgage.

The bottom line is that when you add someone to your mortgage, you’re forfeiting your absolute right to your property.

How much you forfeit will depend on the type of tenancy the deeds are recorded as.

In most cases, solicitors use joint tenancy for joint mortgage arrangements which entitles each party to a 50/50 split of the property.

If you have contributed a larger amount to the purchase of the property through your initial deposit and existing mortgage payments, you may want to consider tenants in common.

Below we outline both, highlighting their pros and cons.

Tenants in Common

Tenants in common is a way of potentially splitting property into unequal shares.

For example, two people can be on the mortgage but one person may have a 70% interest in the property and the other has 30%.

This is especially useful if you have been paying off the mortgage for several years and the amount of equity the other person should receive is less as a result.

The downside to tenants in common agreements is that it is easier for one party to force the sale of it against the other’s wishes.

If you break up with the person you have added to the mortgage, and they own 30% they can force the sale of the property by petitioning the court.

Perhaps even more problematic they can sell their share of the property without your consent.

Which could result in you owning a property with a stranger.

In the event a person dies on a tenants in common agreement, their share of the property doesn’t automatically transfer back to you.

Instead, they can leave the property share in their will, and once again, this can result in you owning a property with someone you don’t know.

To summarise, if you have contributed unequal amounts to the property value, tenants in common agreements are good to reflect this in the ownership percentages.

The downside is that you sacrifice rights over the property if something goes wrong in the future.

Joint Tenants

Because tenants in common can lead to complicated outcomes, most solicitors will discuss joint tenancy as the best route for couples buying a house.

In the event that you break up with the other person, they can’t sell their share and will have to petition the court to sell the overall property.

In the event they die, their share of the property is transferred to you.

The downside of course is that joint tenants only work in equal shares, and you may lose out on any money you have already invested in the property without them.

However, this isn’t the be-all and end-all as you can ask your solicitor to draw up a deed of trust!

Deed of Trust

A deed of trust is attached to your property deeds and your tenants agreement. It outlines the rights and responsibilities of parties that are subject to the agreement.

This means that in most cases you can have a deed of trust drawn up that states that a certain amount (for example, your initial deposit) will be returned to one party in the event of a sale.

You will need to discuss this with your solicitor as there will likely be additional fees for drawing up a deed of trust and there may be other aspects you need to consider.

You will also need to check that a deed of trust is acceptable to your mortgage lender.

Can I Remove Someone from My Mortgage?

The desire to remove someone from a mortgage is unfortunately as common (if not more so) as adding someone to a mortgage.

Relationships break down and people can find themselves trapped in financial agreements with an ex-partner they no longer want to be associated with.

It is common for one person to move out of the property and the other to wish to ‘buy out’ the other’s share.

There are two ways of removing someone from a mortgage and they are the same as adding someone. 

You can approach your lender and ask for someone to be removed however this is not likely to succeed as lenders are loath to release people of their financial commitments to them.

In rare cases, your lender may assist you with this.

The other way is to remortgage. This poses problems for many though for a number of reasons:

• When you initially got the mortgage the affordability calculation would have been conducted on two people’s income. When you remortgage to remove someone, you will need to pass the affordability calculation on your own.
• You will need to have enough equity in the property to cover a ‘deposit’ and also have enough funds in the loan to repay the party you’re removing from the property which can lead to additional costs.
• The UK housing market is now cooling and property prices are stagnating, potentially reaching pre-pandemic levels. This means you could find that you’re unable to remortgage due to negative equity or will have to put more money down to achieve your goal.

Using a Broker to Add Someone to a Mortgage?

Adding or removing someone from a mortgage is complex and you will find it largely comes down to your circumstances.

A broker will be able to establish the best course of action for your situation and could make the difference between a successful or failed outcome.

Boon Brokers is a fee FREE broker and we offer impartial no-obligation mortgage advice.

Boon Brokers is a whole of market mortgage, insurance and equity release broker.

If you’re considering adding or removing someone from a mortgage, contact Boon Brokers today.