A joint mortgage is a loan secured by real property made to more than one party based on their criteria together. It is not the same as joint ownership, and each party has equal financial responsibility for repaying the loan. It is important to understand how ownership of the property is transferred.
A joint mortgage is a mortgage loan, secured by real property, made to more than one party based on their criteria together, rather than individually. Typically, this type of mortgage is given to married couples, but it could also involve other partnerships, such as investors or friends who want to buy a property together.
Often misunderstood, a joint mortgage is not the same as joint ownership. Ownership is determined by the deed, not the mortgage. A joint mortgage simply means that both applicants are responsible for repaying the loan. Couples often choose to apply for this type of mortgage to combine their income and qualify for a higher loan amount.
In a joint mortgage, each party has equal financial responsibility for repaying the loan, and payment history is applied to each party’s credit history. While there are advantages to applying for a mortgage of this type due to combined income and credit scores, it is important to understand how ownership of the property is transferred.
There are two common ways to register a co-ownership deed. Most married couples have joint survivorship, which means that if one person dies, sole ownership of the property automatically reverts to the survivor. In this case, all that is needed to prove ownership is the original joint survivorship deed and a copy of a registered death certificate. Property assigned as joint owners in common would apply to partners who want to own the property equally, but not give their share of the property to the other if they die. In this case, if an owner dies, his portion of the property will revert to his survivor(s) through probate court.
Another common misconception regarding joint mortgages occurs when married couples get divorced. Often, one spouse will stop claiming the deed from the other. This means that one spouse signs over any personal interest in the property and grants sole ownership to the other. However, if there is an outstanding mortgage balance on the property and the mortgage is joint, the couple remains equally financially responsible for repaying the loan. If either party fails to make payments, the other may be responsible for payment, even if they no longer have ownership rights to the property.
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