In simple terms joint mortgages are home loans secured against a property, they are given to two or more parties and is based on their combined criteria rather than individually. Typically it would be a married couple or two people who are living together, but can be granted to other partnerships such as a group of investors or friends etc.
However a joint mortgage is not the same a joint ownership, as ownership is determined by the deed and not the mortgage. A joint mortgage simple means that all parties are responsible for repaying the loan. Taking out a joint mortgage allows couples to combine their income and credit rating to obtain a higher loan amount.
With a joint mortgage each party is held equally liable for the repayment of the loan, and the payment history is applied to each party’s credit history. As already stated the main advantages of having a joint mortgage is to obtain a better deal by combining the credit score and incomes, it is extremely important to know how the ownership of the property is deeded.
2 types of deed for joint mortgages
Commonly there are two ways of recording a deed of joint ownership. Joint survivorship and joint tenants in common.
Joint survivorship is where, if one party dies ownership transfers to the remaining parties. This is what most couples do, so that if one person dies sole ownership automatically transfers to the surviving partner. And all that is need is for proof of ownership is the original deed and a copy of the death certificate.
Joint tenants in common, where both parties wish to have equal ownership of the property, but should one die they do not want ownership to pass automatically to the surviving partner. In this case the ownership if their part of the property would pass to their survivor(s) through the probate court.
One main problem with a joint mortgage is when the partnership breaks down, one party may sign away any persona interest in the property to the other party giving that party sole ownership. However if there is still an outstanding mortgage on the property then both parties are still financially liable for the debt. So even though they may no longer have ownership rights, if the other party fails to make the repayments the mortgage company can still ask them for the payments.