Multi-Applicant Mortgage

What is a multi-applicant mortgage or a multi-person mortgage?

A multi-applicant or multi-person mortgage is a type of mortgage loan for two or more people applying together.

It could be co-borrowers like spouses, family members, business partners, or friends. They put their financial resources together to qualify for a larger loan amount, or more favourable terms than they’d get when applying as an individual.

As an example, two people with stable incomes and good credit histories applying for a mortgage together may qualify for a larger loan, or a better interest rate, compared to doing it individually.

Combined income and credit worthiness of multiple applicants can make homeownership more accessible than it might otherwise be. All borrowers share responsibility for paying for the loan, and each person’s credit and financial situation are taken into consideration by lenders.

How many people can be named on a mortgage? How does this differ from a joint mortgage?

In the UK, a mortgage can typically have up to four people named on it. Commonly, multiple individuals such as partners or family members are responsible for the loan.

In practice, most mortgages tend to just have two people as the primary applicants. If more than four people wish to be included on a mortgage, it might be possible, but could require special arrangements with a lender. It’s not standard practice for lenders to lend to more than four people.

Each lender also has their own specific rules regarding how many people can be named. It’s always a good idea to check with the bank or lender in advance of making an application.

Who can get a multiple applicant or multi-person mortgage? Who is eligible for these?

A multi-person mortgage could be for as little as two people. Couples and partners are the most common scenario, where two people in a relationship – married or unmarried – apply together to buy the property.

Another scenario could be family members. Parents, siblings or other family members might choose to apply for a mortgage together, helping each other out with a home purchase. For example, parents often help their children buy their first home.

Another family member could step in, or friends as co-buyers could be another scenario.
Unrelated people can also apply for a joint mortgage if they plan to live together. That’s less common than the other two options, but it can be done.

Sometimes business partners may use a joint mortgage to purchase a property for their business. It could be a commercial mortgage or potentially a Buy-to-Let property.

How do multi-applicant mortgages differ from standard mortgages?

First and foremost, it’s the number of applicants. Obviously multi-applicant mortgages involve two or more people applying together.

Income assessment is another one. The lender is assessing multiple incomes rather than just one. Responsibility for repayments lies with all of the applicants, not just one.

The ownership of the property will be ‘jointly and severally liable’ whether it’s set up as a joint tenancy or tenants in common.

There could be credit history issues to consider as well. A lender will assess the credit-worthiness of all the applicants. If one applicant has a poor credit score, that could affect the application for all of the applicants. Assessing credit worthiness is important for the lender’s risk, and that risk is bigger with more applicants on the mortgage.

There is also a narrower product range than for individuals, which means less choice of options.

There could be issues with inheritance and succession around how the property is passed on if there are multiple owners. On a joint tenancy, for example, when an owner dies, the surviving owners will automatically inherit the deceased person’s share of the property. But if it’s held as tenants in common, the deceased owner’s share will be passed on according to their Will and the laws of inheritance.

With a standard mortgage, the property is solely in the name of the individual borrower and the transfer on inheritance will depend on their Will.

Obviously there’s shared responsibility for maintenance and costs for multiple applicants, as well.