Joint Application - Finance submission from two or more consumers
A joint application is a finance request by two or more people. Sometimes a joint application is called a dual application, by applying jointly the amount that could be borrowed should increase because both applicants income is then taken in to consideration. With UK mortgages this is covered by the income multiples rule. The income multiple rule is not set in stone and there can be occasions when more will be lent and this is subject to the individual lender of the finance applied for.
Joint Application Example - UK Mortgages
The first step towards purchasing property is to find out how much can be borrowed for a UK mortgage. This is worked out according to income.
As a rough rule the maximum amount normally available to borrow from lenders to purchase property will be three times the consumers annual salary. Alternatively, it tends to be two and a half times the joint income if buying property with a spouse or partner.
So if a single consumer with a salary of £25,000 applies for a mortgage loan, a lender using the income multiple of x3 may agree to lend £75,000 (£25,000x3).
How ever if that consumers partner jointly applies and they earn £20000 the mortgage lender using the income multiple x2.5 may agree to lend £112,500 (£25,000+£20,000x2.5).
Above is a simplified example but it is plain to see that a joint application for a mortgage would result in more being offered by a mortgage lender.
Mortgage Loan Information
The income multiple rule may be useful for the consumer as a guide to how much could be borrowed but it tells people little about how much they can actually afford to repay. The reason is because mortgage rates are the key factor in determining the affordability of property, the lower the interest rate the less a given mortgage is going to cost but if interest rates rise the actual cost each month will also rise meaning larger repayments.