Any mortgage or house purchase involves a big decision and it’s one you need to get right. You might find the huge variety of options confusing or even frustrating, but it’s simply because there are so many variants and situations.
When you’re looking for a mortgage for a new property, the advice we always give is to find the product that suits your situation, finances, and home. There will be a mortgage for you – you just need to know where to look.
One of the areas that you may have heard about for new properties are joint tenants or tenants in common. This is an area that needs some careful attention before you make the choice and purchase a new property.
Firstly, let’s look at the main differences between the two.
What’s the difference between joint tenants and tenants in common?
If you’re buying a new property as a couple or as business partners (for buy-to-let) then you need to ensure you have the right product for your circumstances. This is especially so for joint tenant or tenants in common.
Here are the main differences:
Ownership of the property
- Joint Tenants: Both owners have equal rights to the whole property.
- Tenants in Common: Ownership doesn’t have to be split down the line. The borrowers can own more or less of the share of the property (For example: 60/40 70/30).
Sale of the property
- Joint Tenants: If the property needs to be sold then both owners must agree to the sale. Any proceeds from the sale are then split equally, 50/50.
- Tenants in Common: Both owners must agree to sell the property, but the proceeds are split depending on the percentage agreed on the purchase.
In the event of an unexpected death
- Joint Tenants: If one of the joint owner dies, then the property ownership will automatically go to the surviving owner.
- Tenants in Common: Property ownership doesn’t automatically switch to the remaining owner if one joint owner dies.
In relation to wills
- Joint Tenants: A joint owner can’t pass on their share of the property ownership on in a will.
- Tenants in Common: Joint borrowers can pass on their ownership of the property in their will.
Can I change from joint tenants to tenants in common?
Not everything is set in stone. Even if your property is made of stone, your future isn’t. Life changes and people move in and out of favour. A joint tenant or tenant in common might fall out of favour or the time may come to change the plan.
Can you change from one to the other?
Yes, you can.
You’ll be able to change the ownership type between joint tenants and tenants in common and vice versa, but you’ll need to get in contact with your Solicitor.
This might need to be carried out in the following circumstances:
- The joint tenants get divorced or decide to separate and need to leave their share to someone else.
- The reverse could happen, too. Tenants in Common may decide to go official and get married. They’ll then perhaps want to change from 70/30 or 60/40 share and have equal rights to the property.
In both cases, you’ll need to contact your Solicitor.