Adding Your Partner To Your Mortgage: What You Need To Know

Adding a partner to your mortgage can be a complicated process, and it's important to consider the financial and legal implications carefully. Firstly, it's crucial to assess the financial situation of both yourself and your partner, as lenders will evaluate both your affordability and credit scores. If your lender agrees to add your partner, you may need to hire a solicitor to provide legal advice and help you decide on the percentage of ownership. Adding your partner to your mortgage through refinancing offers benefits like joint ownership and improved borrowing power, but it will involve a new application, joint credit checks, and possibly higher interest rates. Before making a decision, weigh the advantages and disadvantages and consider seeking professional advice.

How do I add my partner to my mortgage?

Lender agreement

To add your partner to your mortgage, the first step is to contact your lender to see if you can simply add your partner's name to the existing mortgage. However, it is likely that the lender will tell you to refinance your home, which means taking out a new mortgage.

If you are taking out a new mortgage, you are not obligated to stay with your current lender. A mortgage adviser can check with their pool of lenders to see which lender will be willing to help. They can compare mortgage deals from different lenders, saving you time and effort.

When applying for a new mortgage, you will need to fill out a Uniform Residential Loan Application, which will require your full names, social security numbers, pay stubs, bank statements, and tax returns. After the new loan is processed, sign the documents and pay any closing costs.

Lenders will always assess the financial situation of both parties to the mortgage. It is crucial to ensure that your partner meets both the affordability and credit criteria of the lender. The impact on the initial deposit is a key issue to consider. If you originally purchased the home on your own and later added your partner to the mortgage, you are both entitled to an equal split of the property. In this case, you will lose the initial deposit you paid in a joint tenancy agreement.

You may need to hire a solicitor to provide legal advice and help you decide on how to divide the ownership of the house. Tenants in common allows you and your partner to decide on the percentage of ownership of the house. It does not have to be a 50/50 split, but in the event of death, the deceased's portion of the house will pass on to the next of kin, which may not be the surviving partner. On the other hand, joint tenancy means you both have equal ownership of the house, and if one of you passes away, that person's share will automatically pass to the other.

Financial and legal considerations

Adding your partner to your mortgage involves several financial and legal considerations. Firstly, you should contact your lender to see if they will allow you to add your partner to the existing mortgage. However, it is likely that the lender will require you to refinance your home, essentially taking out a new mortgage. This process will involve a joint application, credit checks, and potentially higher interest rates if your partner's credit score is lower.

Before proceeding, it is important to carefully weigh the financial implications. Adding your partner to the mortgage will result in joint ownership, which can have both benefits and drawbacks. One key financial consideration is the impact on your initial deposit. If you originally purchased the property on your own, adding your partner to the mortgage and deeds will result in an equal split of ownership. Consequently, you may lose the initial deposit you paid, as it will now be divided between the two of you.

Another financial consideration is how you and your partner will contribute to the mortgage payments. It is likely that your incomes are not equal, so deciding on a fair contribution amount is important. Additionally, you should consider what will happen if one of you loses their job or goes bankrupt. In the event of a breakup, you should also discuss whether you will sell the property or if one of you will stay and buy out the other's share. Seeking legal advice from a solicitor or lawyer can help you navigate these financial considerations and protect both parties' interests.

Furthermore, it is essential to consider what will happen to the property in the event of the death of one partner. If you are unmarried, the house may not automatically go to your partner unless the necessary legal documents are in place. Discussing these possibilities with your partner and seeking legal advice can help ensure that your wishes are carried out.

Lastly, be aware that removing a name from a mortgage can be challenging. Relationships can break down, and you may find yourself financially tied to an ex-partner. Removing someone from a mortgage usually involves either approaching the lender or remortgaging, both of which can be difficult and pose potential problems. Therefore, carefully consider all aspects before deciding to add your partner to your mortgage.

Ownership division

When adding your partner to your mortgage, you will need to consider how ownership of the house will be divided. This is an important step as it will determine what happens to the property in the event of a death or separation.

There are two main ways to divide ownership: tenants in common and joint tenancy. Tenants in common allows you and your partner to decide on the percentage of the house that each person will own. This does not have to be a 50/50 split and can be adapted to fit your financial situations. However, in the event of death, the deceased's portion of the house will pass to their next of kin, which may not be their partner. On the other hand, joint tenancy means that you and your partner have equal ownership of the house. In the event of death, the deceased's share will automatically pass to the other person.

If you are unmarried, it is important to be aware that the house may not automatically go to your partner if you are not on the mortgage or deed. In this case, you may want to consider adding your partner to the deed, which can be done through a quitclaim deed, or by speaking to a lawyer to ensure the necessary documents are in place.

When deciding how to divide ownership, it is important to consider the financial implications. Adding your partner to your mortgage will likely involve a whole new application, with joint credit checks and potentially higher interest rates if their credit score is lower. It is also important to consider how costs will be divided and how this may change over time. For example, if one of you loses your job or goes bankrupt, you will need to decide how this will impact your contributions.

Overall, it is important to carefully weigh the benefits and drawbacks of adding your partner to your mortgage and to seek legal advice if necessary.

Deposit and affordability

Adding your partner to your mortgage is a big decision and one you should consider carefully. It is a good idea if your partner is already contributing to paying off the mortgage and/or household bills. It can also be a good idea if you have children together.

Your mortgage adviser will be familiar with adding partners to mortgages. Your partner will need to undergo credit and affordability checks to make sure that they can also keep up with the repayments. Your current lender may charge you a fee for this service, and regardless of how well you currently keep up with repayments, they are under no obligation to add your partner if they don’t pass the checks.

If your lender does agree to add your partner, you may need to hire a solicitor to provide legal advice. Your solicitor can help you decide how to divide up the ownership of the house. Working out percentages of the ownership of the house will prove useful should you split up in the future and need to sell the property. You might be charged a fee by the solicitor for their help, so you should take this into account when making your decision.

Tenants in common is where you and your partner decide on the percentage each of you will own of the house. It doesn’t have to be a 50/50 split, but, in the event of death, the deceased’s portion of the house will pass onto a next of kin, which might not be you. Joint tenancy is where you both have equal ownership of the house and if one of you should pass away, that person’s shares will automatically pass onto the other.

Adding your partner's name to your mortgage through remortgaging offers potential benefits like joint ownership and improved borrowing power. However, it will involve a whole new application, with joint credit checks and potentially higher interest rates if their credit score is lower. Weigh up the financial implications and legal considerations carefully before diving in.

Death and wills

Adding a partner to your mortgage can be a complicated process, and it's important to consider the financial and legal implications carefully. One key consideration is how the ownership of the house will be divided between you and your partner. This decision will have significant implications in the event of death.

When it comes to death and wills, the specifics of what happens to a mortgage depend on several factors, including the type of ownership, the existence of a will, and state laws. Here are some key points to consider:

• Type of Ownership: If you and your partner have decided on a joint tenancy, you both have equal ownership of the house. In this case, if one of you passes away, the other person will automatically inherit the deceased's share of the property. On the other hand, if you have a tenants-in-common agreement, you can decide on the percentage of ownership for each of you. In the event of death, the deceased's portion will pass to their next of kin, which may or may not be the surviving partner.
• Will and Estate Planning: It is crucial to have a clear and legally valid will in place. This document should specify who will inherit the property and what should happen to the mortgage. In the absence of a will, state laws will determine the distribution of the estate, and the surviving partner may not automatically inherit the property.
• Surviving Spouse or Partner: If your spouse or partner is not a co-owner or co-borrower on the mortgage, they may risk losing the home after your death if they are not included in your will. Federal law provides protections for surviving spouses, allowing them to assume the mortgage and keep the home, as long as they can afford the payments.
• Heirs and Beneficiaries: If there is no spouse, the heirs or beneficiaries of the deceased will typically be responsible for paying off the loan to keep the home. They will receive a notice from the lender and have a limited time to decide whether to buy, sell, or turn the home over to the lender.
• Mortgage Protection Insurance: Consider purchasing mortgage protection insurance (MPI) to ensure that your partner or loved ones can keep the house after your death. This can be a viable option if traditional life or disability insurance is not accessible.
• Legal and Financial Advice: Consult a solicitor, estate planner, or financial adviser to navigate the complexities of adding a partner to your mortgage and making decisions regarding death and wills. They can help you understand your rights, obligations, and options in different scenarios.

Frequently asked questions