Joint Ownership: Your Guide

Owning a home with someone else can be exciting. It can also be confusing when you’re given different options for joint ownership.

When you own a home with at least one other person, you’ll have to choose between owning it as tenants in common or joint tenants.

They mean different things for your future ownership and have different consequences in the event of a house sale, the death of an owner or the relationship ending. This makes it important to work out which form of ownership is best for you before you buy a house.

Tenants in common

When you choose to buy as tenants in common, you have the ability to own a different share of the property to your co-owner. Instead of owning 50% of the home each, you can decide on your share, based on certain factors. It’s recommended that you record your financial obligations and ownership share in a deed of trust.

For example, if you’ve contributed 70% of the finances of the home, you might want to own 70% of it. However, this doesn’t mean your co-owner only has 30% of the rights to the home. They have as much access as you do.

Tenancy in common means that when you die, your share of the property does not automatically go to your co-owner. This means you can choose who you want to inherit it and you can set this out in your Will.

Owning as tenants in common is often chosen when purchasing buy to let homes or if you’re buying with a friend or relative, rather than a partner or spouse.

Joint tenants

As joint tenants, you and your co-owner will own equal shares of the property. This is a common choice for couples buying a home for that reason.

This form of ownership means that if you die, your share of the house will automatically be passed on to your co-owner. It means you are not able to choose who to leave it to and your co-owner will then own the entire property.

In the event of both joint tenants passing away, the property will be left to the beneficiaries set out in a Will or according to the laws of intestacy if there is no Will.

Selling a jointly owned home

With both forms of joint ownership, you will need all owners’ agreement to sell a house. This means it isn’t possible to sell without the knowledge of an owner.

Selling as joint tenants means you will both receive 50% of the proceeds. Even if you contributed more financially to the property, you won’t be able to force your co-owner to split the sale proceeds according to that difference.

Meanwhile, when you sell as tenants in common, you can receive different shares of the proceeds, based on what is set out in the deed of trust.

Joint mortgages

When you want to buy a house with someone else, you’ll need to take out a joint mortgage. Some lenders will allow up to four borrowers, but it’s more common for two people to take out a home loan.

Combining finances means you will usually be able to borrow more money, as well as put down a bigger deposit. This higher deposit could mean that you are able to secure a lower interest rate on your mortgage.

But it’s also vital to remember that taking out a joint mortgage links your finances to the other homeowners. This could affect your credit rating if one borrower faces financial problems.

You’ll also have to ensure that you can cover the whole monthly repayment figure in the event your co-owner can’t come up with their share.

For help with the legal side of buying a house as a joint owner, trust First4Lawyers. We work with conveyancing experts who will make the process as straightforward as possible. Just give us a call or try our simple conveyancing calculator for a legal quote.

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