When someone runs out of liquid funds, the best option they look for is taking money on credit or loan. There are many ways to raise a loan or borrow money. First, you can ask a friend or family to lend you some liquid funds. Second, you can borrow money from the banks. But when none of these options are available to you or you want funds more than what the banks or a friend can lend you.
Can You Add Someone to a Mortgage?
Yes, you can add someone to a mortgage without refinancing by contacting your lender and paying the required fees. The process of adding someone to a mortgage is easy. However, some situations may warrant adding a co-borrower to your mortgage loan. Additionally, you can remortgage and apply for a joint mortgage.
A mortgage loan, or simply a mortgage, is money borrowed by keeping an asset, primarily a commercial property, as collateral. The owner of the property gives possession of the property to the lender until the loan is repaid. In most cases, the loan repayment period is fixed, and the borrower has to repay the loan within that time to get the property back. But it all depends upon the terms and conditions set at the time when the loan is taken. Different sources have different terms and conditions.
Since a mortgage loan is not a small amount of loan, it affects your credit score to a great extent. This kind of loan raises a red flag on your credit report and becomes a barrier if you want to raise money furthermore. To share the responsibility and increase your chances to raise more money, one can apply for a mortgage loan with a co-borrower. Two people sharing a big loan would have a more negligible effect on their credit scores than one with a bigger loan.
There are two ways to add a co-borrower to a mortgage. You can either put both the names at the time of raising the loan. Or you can add a co-borrower after you have already taken the loan. But adding someone to a mortgage has some rules and conditions that need to be followed.
Why Do You Want to Add a Co-borrower?
Apart from just sharing the responsibility, some people may want to share the ownership of the property with other people. The person could be anyone, your spouse, child, a parent, or a friend. Instead of adding this person as a co-borrower, you can add this person to your mortgage deed. This is simply because when you give someone a share of your property, you may also want them to share your loans or debts. The person may even agree to it, but there has to be proof of this agreement to make the other person obligated towards the repayment. This is why adding the name of the co-borrower in the mortgage is considered better.
But adding a co-borrower to a mortgage is not a piece of cake. One has to pay a fee and get the name added to a deed. Some situations may restrict adding a co-borrower, while some may assert you to the co-owner’s name as a co-borrower.
Adding someone to a deed with a mortgage
- You can add someone to the existing mortgage by contacting a mortgage lender and filing a legal form.
- You can add someone to the deed with a mortgage if you remortgage and apply for a joint mortgage (refinancing). This is a new mortgage policy.
- If you are married, you have equal rights on the property, even the mortgage is in your name. But you can add a spouse to a mortgage if you want to set different shares when you decide to sell the property.
- You can invest different shares into the property with your partner (for example 70% and 30%) and make arrangements that you get a proportional invested share when you sell a property.
Refinancing and Its Requirements
It is compulsory to refinance your mortgage to add a co-borrower. You cannot just informally ask your mortgage company to put another name in your current mortgage deed. Refinancing is essential to change the original terms of the loan. In addition, it helps you to add a partner who will help you repay the loan and help you share all the terms in the mortgage. These terms could be the installments, interest rate, repayment dates, and interest rate. Refinancing can be used for both adding or removing the name of a co-borrower from the mortgage.
Refinance requires you to submit a new application for a mortgage to add a co-borrower. When refinancing, the borrower can either apply to his current mortgage company or look for a new or better lender who can give him a lower interest rate or lenient terms than his current company. But, it is not guaranteed that he will get the approval for the new deed by any of the lenders, whether it’s the current one or a new company.
There are many factors that a lender considers before approving a mortgage application. These factors may include the credit score, current debts, current employment, past loan repayment graph, or the valuation of the assets owned. These factors apply to both borrower and the co-borrower. Therefore, the mortgage company makes sure that both the borrowers can repay the loan.
Can you pay someone’s mortgage anonymously?
Yes, you can pay someone’s mortgage anonymously as a gift or as a relative or friend who wants to help. In practice, you can arrange to be anonymous with a mortgage lender company or you can make the payments using a money order mailed with no return address.
Conclusion
Adding a co-borrower may sound promising as it helps you lay down some of your burden on a partner. But refinancing to add a co-borrower comes with costs that need to be incurred and cannot be ignored. For example, when you apply for a new loan, you have to close the old mortgage deed to add a co-borrower, including a closing cost. This cost may be between 2% to 5% of the entire loan cost. This closing cost is paid at the time when the mortgage is closed. But if you are refinancing the mortgage from the same company, they may consider adding it to your loan balance. This may increase your interest as well as the installment amount.
So, always weigh the consequences and the benefits of adding a co-borrower before applying for refinancing.
