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A joint mortgage is a home loan that is taken out by more than one person. Both parties will be mentioned on the paperwork. This type of mortgage could be taken out by any combination of two or more people. It is common for married couples to have a joint mortgage, for example, but the loan could equally be taken on by family members and even friends. Business partners might also co-sign a mortgage application if they wish to buy a property together as part of their business ventures.
Having a joint mortgage means that both people share the responsibility for making the monthly payments. This means if one person does not or cannot meet the repayments, the bank or building society can ask the other person to pay them instead. Both are responsible, yet if one disappears for any reason, it could potentially leave the remaining party in dire financial straits.
There are several reasons why joint mortgages can be beneficial compared to solo applicants for a home loan. The main reason is that when two or more people apply for a mortgage, the income of both will be considered when calculating how much they can borrow. There are many cases where one half of a partnership (whether in marriage or otherwise) could not afford to buy a property alone. However, when the income of both partners is included, a purchase becomes affordable because of the higher figures involved. This means even lower-income families can often afford to buy when it would otherwise be impossible.
A joint sole agency occurs when someone with a property to sell hires two estate agents to market and sell that property. In this situation, both agents would receive a commission regardless of which one finds a suitable buyer for the property.
While it sounds as if the seller must pay up twice, this isn’t the case. Instead, the agents agree ahead of time to divide the fee between them when the property sells. Alternatively, they may agree the person who sells the property takes the entire commission fee. The ratio decided upon is agreed in advance with the seller. The terms are written into the agreement, so each party knows what the outcome will be when the property is sold.
The joint sole agency agreement is one of three methods that can be used when trying to sell a property. The other two are using a sole agent or a selection of agents (often called a multiple agent approach). With a joint sole agency option, there are two estate agents involved. If you opt for more than that, you’re using the multiple agent approach.
Sellers who are interested in taking this approach should be aware that both agents must agree in advance for it to work. If one rejects the idea, the seller would either need to find another one who would agree to it or go for another option. Make sure you know what the commission would be on the sale if it goes through. The amount would then be divided as set out in the agreement or kept by the estate agent who found the buyer.
While many rental properties are taken on by single tenants, some qualify as being rented by joint tenants. In this case, one tenancy agreement is signed by two or more parties depending on the individual situation.
This form of tenancy is frequently used by couples. It ensures that if one partner dies, the property automatically passes to the other. If only one partner had signed the tenancy agreement and that partner died, the surviving partner would have no claim to remain in the property. There is a chance they could come to an agreement to continue renting it from the landlord, of course. However, this would create additional stress and worry at a time when neither would be wanted.
A joint tenancy can also be taken on by other groups of people. However, it is very important to consider this carefully before signing as a joint tenant. There are risks involved if one or more other tenants in the same property should disappear or fail to pay their part of the rent. If this occurred, the landlord would be able to seek the outstanding monies from you and from any other tenants in the property who had signed that agreement. This may leave you in financial difficulty and you could not refuse to pay since the terms would have been clear in the agreement.
The same applies if one tenant causes damage to the property or invites someone to visit who does something similar. The landlord could again seek compensation for the damage caused – again from the other tenants in the property.
The alternative to joint tenants is Tenancy in Common.