A joint ownership mortgage is a type of mortgage arrangement in which two or more parties share in the benefits and responsibilities associated with the financing of a purchase of real estate. The arrangement is somewhat different from a joint mortgage, in that the former involves joint owners of the property whereas a joint mortgage is simply a commitment between multiple parties to share responsibility in making mortgage payments. There are a number of different types of joint ownership mortgage plans available in many nations around the world, with some of the plans going under names such as shared ownership financing and housing equity partnerships.
With a joint ownership mortgage arrangement, it is possible for two or more parties to combine their resources in order to purchase real estate. All parties share in contributing to a down payment on the property, and all names are included in the official paperwork submitted to the lender. If approved, the joint owners will absorb any up-front expenses such as closing costs, work together to ensure that the monthly mortgage payments are made on time, and also manage any property taxes assessed on the real estate. Since all the participants in the joint ownership mortgage are identified as borrowers on the loan, all are responsible for making sure the terms of the plan are carried out.
One of the benefits of a joint ownership mortgage is that people who would otherwise be unable to obtain financing on their own can become a partial owner in a piece of property. In addition, this type of lending arrangement may also make it possible to retire the debt in a shorter period of time, ultimately minimizing the amount of interest that is paid over the life of the loan. In the event that the property is purchased as an investment and can later be sold at a profit, each of the owners receives a return based on amount originally invested in the home.
While there are many benefits to partnering with others to arrange a joint ownership mortgage, there are a few drawbacks to consider. Typically, all decisions regarding the property must be made jointly by the owners. If one partner is suddenly unable to contribute toward the monthly installment payment, the other co-owners must make up the difference. Should any personal disputes arise regarding the property lead to one or more partners wishing to end the business relationship, this could create severe difficulties for everyone involved. Before choosing to buy a home and obtain financing through a joint ownership plan, make sure all parties understand the scope of their responsibilities and that there is a good chance of everyone getting along at least long enough to pay off the debt.
