According to the I Observatory on Housing and Sustainability prepared by UCI , 75% of home buyers in our country are couples with children (47%) or couples (28%). Buying a house is an important decision and signing a mortgage loan with another person offers advantages, although it carries risks, especially when love ends. If you are thinking of taking out a joint mortgage, review the advantages and disadvantages before making a decision.
Shared mortgage: what you should think about before taking the plunge
Applying for a mortgage as a couple is a big commitment, although the chances of the financial institution granting it or being able to increase the financing percentage are greater than when applying individually.
One of the first things to consider before applying for a joint mortgage is whether both parties want to become homeowners.
If the answer is yes in both cases, the next step is to reflect on these questions:
Is the relationship solid? You don't need to be together for 10 years to take the plunge, but you do need to think it through carefully, keeping in mind that it is a long-term joint investment.
Can you afford a house and a mortgage? Do you have enough savings? What purchase budget can you afford? In other words, it is essential to assess your overall financial situation to find out what house you can afford with your salary. To get out of any doubts, you can use a mortgage simulator .
What house do you want to buy? Another question that should be answered before taking the step is to know the buyers' short and medium-term plans. Do you plan to have children? Perhaps a small studio in the city centre is the ideal option at the moment, but not in the medium term if you plan to have a large family. Although in this case there are options such as selling the house to buy another, thinking in the medium term will allow us to choose the house that best suits our needs.
What happens if one contributes more money than another? A widespread belief In joint mortgages and when buying a house as a couple, it is necessary to do everything 50/50 and, no, it is not strictly necessary. If one of the two is going to contribute more savings, this should be reflected in the property deed, just as if one is going to pay a higher percentage of the mortgage.
Advantages of signing a joint mortgage
Applying for a joint mortgage has its advantages over doing it alone.
The main reason is that it increases the chances of getting a mortgage. Do you want to know why? It is a simple question of solvency and risk. In a joint mortgage there are two holders, which offers a greater guarantee of payment for the financial institution.
In addition, since there are two salaries, the income is higher and you will also be able to access a larger loan amount.
In addition, you will be able to obtain better conditions, again because your profile as a client is better than that of a person looking for an individual mortgage.
For example, experts recommend allocating 30% of net monthly income to mortgage payments, so a mortgage holder who earns €2,000 a month could assume a maximum monthly payment of €600. However, combining the salaries of both holders, if one person earns €2,000 a month and the other €1,700, the resulting monthly payment could reach €1,110.
Disadvantages of having a joint mortgage
The first risk of a shared mortgage is that the responsibility for the mortgage is also shared. Both holders will assume 100% of the responsibility for the debt, regardless of the amount they agree to contribute, and in the event of default, both will be liable for the entire amount with their present and future assets.
What happens to the mortgage when love ends?
If love ends, there are solutions for joint mortgages.
The most common solution is for one of the members of the couple to acquire the other's share of the home and assume payment of the outstanding capital of the mortgage.
Another of the most common options is to sell the property, settle the loan with the financial institution and divide the money as agreed by both co-owners.
It is also common to try to renegotiate the mortgage conditions with the financial institution to adapt it to the income of a single holder.
Another alternative is to rent the property and use the income to pay the mortgage.
