Facebook Linkedin Instagram
Tax Year Overviews and Tax Calculations Explained image
CONTACT US

3 Person Mortgage

  • Get expert mortgage advice from 5- star client service reputation advisers
  • We’ll find your perfect mortgage solution from across the whole of the market
  • Our team will support you through every step, even after you have your mortgage offer

Get in touch for a free, no-obligation chat with our trusted advisers about how we might be able to help you.

01794 379 379

What's On This Page?

Get In Touch
1 Step 1

By sharing your details, you consent to our contact and that you have read and agreed with our privacy policy and just in time statement


keyboard_arrow_leftPrevious
Nextkeyboard_arrow_right
3 Person Mortgage image

3 Person Mortgage

Rita Kohli explains how a three-person mortgage works.

Can you have a three-person mortgage? Can three people be on the same mortgage?

Yes, absolutely. It’s not very common, but it is doable. It might be a scenario where it’s mum, dad and child, for example. All three people can be on the mortgage.

We just have to be careful that whoever is named on the mortgage is also named on the deeds to the property, because that’s what a lender requires legally. Importantly, all parties are equally liable for the mortgage debt.

Can you get a three-person mortgage with friends?

You can, although the lenders that will allow it are very limited. More lenders are recognising that friends would like to buy together, so it is possible.

How do mortgages with three or more applicants work?

There are the same parts to the process as on a standard mortgage, and we walk through each person’s circumstances to confirm how the affordability will be met. Does it fit in with your budget? What are your future plans?

Hopefully you’re not looking to come off the mortgage at some point, as that will complicate things. We need to understand why three people are going on the mortgage and make sure they get legal advice on how they want to own the property.

As I mentioned, you have to be named on the deeds as well as the mortgage. As far as the lender is concerned, you’re all equally liable. They don’t care who’s paying the mortgage or whose account it’s coming out of, as long as it’s paid.

Although they allow more than two people on a mortgage application, some lenders may cap it to two salaries. If, say, the child and one parent are the higher earners, it may be best for their two incomes to be assessed. The third person isn’t included. Your broker will work out the details.

What deposit do we need? How much can we borrow with three people on a mortgage?

The deposit is the same as for a single applicant. We would have to research a bit further if you only have a 5% deposit. It doesn’t matter who contributes each proportion of that deposit, but if you can collectively put in 10% it will open up more lender opportunities.

In terms of borrowing amounts, some lenders will only accept two salaries. We’d see how much you could borrow based on two of your three incomes. But some lenders may accept all three salaries – it’s very variable.

What documents do you need with three people on the same mortgage?

We need documents for all three people, which makes it a lot busier. We’ll probably find that one person is more organised than the others, but we will nudge all the parties along.

We try to get all three parties at the initial meeting, so we understand the full circumstances and everyone is fully aware of what’s coming.

If you’re employed, we’ll need three months’ payslips. If you’re self-employed it will be two years’ tax year overviews and calculations. Everyone needs to provide bank statements for the last three to four months, credit reports and their ID.

Does it cost to add someone to a mortgage?

If you’re applying together at the outset, there’s no cost. It’s more complex if, later on down the line, there are two of you on the mortgage and you decide to bring a third party in. You need a solicitor and consent from the mortgage provider – and they need to understand why the third person is being added on. It can get costly.

If you’re doing it at the outset, the costs are just standard as part of the mortgage application, whether it’s one, two or three people.

Speak To an Expert
We’ll help you compare mortgage offers from different lenders and find the one that’s right for you. We can also answer any questions you have about the mortgage process and help you understand the paperwork.

Do you pay stamp duty when adding someone to a mortgage? What other costs are involved?

This is an interesting one. With the example of parents and a child, perhaps the parents own a property, but the child doesn’t.

Because all three of you are going in together, we need to understand what’s happening with the parent’s property. If they own or have owned a house, they come under the standard stamp duty rules – whereas for a first-time buyer, the rules are different.

You will pay stamp duty if at least one of you has owned a house. We’d explain that circumstance when the situation arises.

Other costs would be as standard. If you’re selling and buying, for example, there are estate agent fees to think about. You’ll certainly be paying solicitor fees and survey fees, depending on the type of property you’re buying, as well.

What are the pros and cons of having three people on a mortgage?

The big advantage is the affordability boost of having three on a mortgage. It may allow you to maximise the amount you can borrow – but in fact, it could also restrict the length of your mortgage term. That’s because they’ll base it on the eldest person’s age.

A younger adult, for example, could have a 30 or 40 year mortgage, but not if their parent’s named on it. Many lenders will limit the term to their retirement date.

We would discuss how that could impact your monthly mortgage payments. But if all three of you are chipping in together, it shouldn’t feel that expensive. It all comes down to a really detailed conversation.

An important thing to discuss at the initial meeting is whether each buyer is in this for the long term. If one of the parties decides to leave, what share do they get of that property? You would have to pay legal charges to take that third person off, and to reapply for a new mortgage for the people or person left – so it’s best to go into it as a long-term commitment.

Which lenders offer mortgages to groups of three or more people? Are there many?

It’s not a huge amount. Most default to two people, but some high street lenders will accept up to four people.

Their criteria can vary on whose salaries they use – whether that’s all three or just two. There are options, but they are narrower if you decide to buy as friends.

How do I get a three-person mortgage or a multi-applicant mortgage? How can a mortgage broker help?

It’s very valuable to use a broker because we have the tools and resources to filter down which banks and building societies will allow it. Every single one will have their own individual criteria to meet.

We have relationships with the lenders and can speak directly to them to find out our chances of success, depending on the circumstances.

Once we’ve identified the most suitable lender, we’ll discuss with you the deposit, your affordability and the circumstances around how you’re buying. We’ll then be able to tell you exactly how the application process works – and support you through that journey.

Key Takeaways

  • While not very common, a three-person mortgage is possible for family (e.g., two parents and a child) or friends. All parties are equally liable for the mortgage debt and must be named on the property deeds.
  • A major advantage is the affordability boost. However, lenders vary, with some only accepting two salaries toward the borrowing amount, while others may accept all three.
  • The deposit requirements are the same as for a single applicant, and a collective deposit of 10% will open up more lender opportunities than a 5% deposit.
  • The maximum mortgage term can be restricted by the age of the eldest applicant, with many lenders limiting the term to that person’s retirement date.
  • It is best to enter a multi-applicant mortgage as a long-term commitment, as the process of later removing a person and reapplying for a new mortgage can be complex and costly, involving legal charges.

YOUR HOME IS AT RISK IF YOU FAIL TO KEEP UP PAYMENTS ON YOUR MORTGAGE OR ANY OTHER LOANS SECURED AGAINST IT.

FOR SPECIALIST TAX ADVICE, PLEASE REFER TO AN ACCOUNTANT OR TAX SPECIALIST.

Useful Links