4 Person Mortgage

Can I get a mortgage with four people? Can a house be owned by four people?

Yes, you can get a mortgage with four people, and it’s called a joint mortgage in the same way as with two people. It’s quite a common route for various different groups: friends, family members or multiple couples, for example. It’s also common for business partners or investors to pull together and buy property together this way.

How many people can legally own a house?

There’s an important distinction between legal ownership and beneficial ownership in the UK property system. A maximum number of four people can be legal owners of a property, which means that four names can be registered as legal proprietors of the title deeds with the Land Registry.

However, more than four people can be ‘beneficial owners’. Essentially, that means they have a financial stake in the property. This is usually documented using a Declaration of Trust or a Deed of Trust, which outlines who owns what percentage of the property, and who’s entitled to what if it’s sold in the future.

Can you get a mortgage with friends?

That’s a good example of what we just outlined. Imagine six friends want to buy a house together. Only four of them can be listed as legal owners on the Land Registry.

All six of them can still invest and benefit, but the legal owners must hold the property in Trust for the others. The shares are recorded in the property deeds, as well.

In terms of a mortgage, only a maximum of four people can apply, but there’s nothing preventing a group of friends from doing this together.

How do mortgages with four or more applicants work? Is the process any different?

The applicant and up to three other people can apply for a joint mortgage. All the incomes and credit histories are taken into account in the same way as normal.

You’ll all be jointly liable for the mortgage, which means if one person can’t pay, the others must cover it.

You also have options around how ownership is set up. If you are joint tenants, each applicant owns 100% of the property jointly and severally, while as tenants in common, each applicant owns a specified percentage of the property.

What deposit do you need and how much can you borrow with four people on a mortgage?

Getting a mortgage with four people can boost your borrowing power, but the deposit and loan size will depend on a few key things. These are no different from a single application.

The deposit can range from 5% to 15%. With new builds or for applicants with credit issues, sometimes a higher deposit might be required.

What documents do you need with four people on the same mortgage?

It’s the usual – pay slips for employed applicants and bank statements for everybody. The self-employed will need details of their accounts, which can be from tax calculations, SA302s and tax year overviews.

It’s no different to a normal mortgage for a single applicant, but it could just be trickier for an advisor who’s chasing all these documents from four people. It might vary depending on how the applicants are employed, and that could cause delays, but the fundamentals are basically the same.

Does it cost to add someone to a mortgage?

Yes, there could potentially be costs to add someone to a mortgage – both lender fees and legal fees. Lender fees could range from £100 to £300 depending on the lender.

The services of a solicitor will be needed to update the title deeds with the Land Registry and handle the transfer of equity.

Do you pay stamp duty when adding someone to a mortgage? Are there any other costs we need to know about?

Yes, stamp duty could be payable when adding someone to a mortgage. It will kick in when the person you’re adding takes on a share of the mortgage that is worth more than £250,000 for most buyers.

If they already own a property, the threshold drops to £125,000 – that would apply if they already own another property such as a Buy to Let or a home elsewhere.

HMRC treats it like a purchase of part of the property, even if no money is changing hands. It’s due to the transfer of the mortgage debt. That’s the sort of scenario where you would see stamp duty being payable.

What are the pros and cons of having four people on a mortgage?

The obvious pro is increased borrowing power. The more salaries and incomes that are put together to calculate the borrowing, the better. The higher the total income, the more you’ll be able to borrow.

There’s also a benefit in sharing costs and the mortgage repayments. There are also flexible ownership options such as tenants in common.

The disadvantage is that you each have joint and several liability. As mentioned earlier, if one person can’t pay, the others have to cover their share. Other drawbacks could be limited lender choice, complex exit scenarios when you’re selling, and credit risk. If one applicant has poor credit, that can sometimes cause an issue for others named on the same mortgage.

Which lenders offer mortgages to groups of four or more people? Are there many?

There aren’t a huge number of lenders for this, particularly in Northern Ireland. Barclays are the go-to for applications like this.

In England, you always have a slightly wider choice for any sort of mortgage than here in Northern Ireland. Lenders in England would include Skipton Building Society, Bath and Metro Bank. But the pool would still be a little limited for multiple applicants.

How do you get a four-person joint mortgage? How can a mortgage broker help?

As always, mortgage brokers’ knowledge and experience of the products, the market and the processes in general will always add value. That’s even more true if you’re looking at multiple applicant mortgages, especially for four people.

Undertaking the journey without this advice will always carry a risk, and it can be cumbersome. We’d always recommend seeking out the assistance of an experienced mortgage broker firm.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

For specialist tax advice, please refer to an accountant or tax specialist.