Hannah-Marie, Senior Underwriter
Purchasing a new property, whether as a first-time buyer or as an experienced landlord, is probably the biggest financial commitment any of us will ever make in our lives.
If your customer is buying a property as a home to live in as a couple or a buy to let investment with a business partner, it’s essential they choose the right type of joint ownership that reflects their situation. The type of ownership affects what a customer can do with a property if their relationship with a joint owner breaks down or if one of the owners dies.
Many customers aren’t sure of the differences between Joint Tenants or Tenants in Common which is why confusion can sometimes happen. For example, many people assume a property will automatically go to their partner in the event of their death or they’ve got equal rights to a property in the event of a divorce. However, this is not necessarily the case, which is why customers need to carefully consider which type of ownership best suits their personal circumstances and their relationship with their fellow buyers.
For joint borrowers where one party is in a lower tax band, there may be tax advantages to structuring ownership to Tenants in Common as they can determine the shares they own to favour the lower band individual.
Customers considering Tenants in Common should always speak with a suitably qualified tax advisor and take legal advice before making any decisions.
At Precise Mortgages, our ICR calculator is designed to take individual tax circumstances into account, meaning customers who decide this is the right option for them could achieve the loan size they want. It could also lead to a wider product choice.
So which ownership type is right for your customer? Understanding the differences between the types of ownership is key and can be summarised as follows:
Tenants in Common
It’s worth pointing out that customers can change ownership type between Joint Tenants and Tenants in Common and vice versa by getting in contact with Land Registry.
To learn more about Precise Mortgage’s bespoke ICR, speak to our dedicated intermediary support team on 0800 116 4385 or for more information visit https://www.gov.uk/joint-property-ownership.