This is where a group of people can have a mortgage based upon the incomes / earnings of each person. It also means that the property purchased is therefore jointly owned by the group all with an equal share. So, if 3 people enter into an agreement for a group mortgage, they would each own 33.33%, if 4 people were to use a group mortgage they would then own 25% each.
Due to the increase in property prices, group mortgages are becoming increasingly popular in today’s society and currently occupy around 2%-3% of the UK mortgage market. This figure is expected to increase even further as the cost of housing is not expected to fall in the near future.
The most likely reason for choosing a group mortgage is that an individual simply cannot afford a mortgage and/or initial deposit. Therefore it makes sense to ‘partner up’ with others in a similar situation and that way incomes can be combined, which will help obtain a better mortgage deal. The good thing about a group mortgage is that it gives people the opportunity to get on the property ladder whilst having all the benefits of any rises in the property value.
The actual process is near on identical to that of a normal mortgage application accept an ‘ownership agreement’ will need to be drawn up to clearly outline the agreements between each of the individuals.
