Joint Mortgages: Pros, Cons, and What You Need to Know
A joint mortgage can be an exciting step toward homeownership—but it’s not without risks. Many Canadians turn to joint mortgages when they want to buy property with a spouse, partner, family member, or even a close friend. For example, in 2021, 19.8% of Ontario residential properties co-owned by people born in the 1990s included their parents, according to Statistics Canada. By combining financial resources, buyers can often afford homes that would otherwise be out of reach. However, this isn’t without drawbacks.
With home prices climbing and affordability stretched across Canada, more buyers are turning to joint mortgages as a way to get into the market. This guide explains what they are, the benefits and risks, and the key factors to weigh before committing
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Key Takeaways
- Pooling incomes and credit can increase your buying power, but it also means tying your finances together.
- Everyone shares equal risk, so if one person misses payments, the others must cover the full mortgage.
- Legal agreements and exit strategies help protect all parties if circumstances change.
- Open conversations about money and future plans build trust and prevent misunderstandings.
- A mortgage broker can guide you through risks and help find the best arrangement.
What is a Joint Mortgage?
A joint mortgage is a home loan taken out by two or more people together. Instead of relying on just one person’s income, the lender evaluates the combined financial strength of all applicants. This setup is common among married couples or long-term partners throughout Canada. In cities like Ottawa, where real estate is expensive, co-borrower mortgages can also include siblings, parents and adult children, or even friends and business partners who want to invest in property.
How is a Joint Mortgage Different from an Individual Mortgage?
The main difference from an individual mortgage is shared responsibility. If two people own a home together, they are likely to be 50/50 owners. However, when it comes to the mortgage, each is 100% responsible for the debt repayment obligations.
For lenders, this provides reassurance, which makes careful planning, open communication, and trust between borrowers essential.
What are the Pros of a Joint Mortgage?
For many buyers, joint mortgages open the door to homeownership that might otherwise feel out of reach. Here are the main advantages:
- Increased Borrowing Power: By combining incomes, buyers may qualify for a larger mortgage. This is especially helpful in competitive Canadian housing markets where property prices are high.
- Shared Responsibility: Monthly mortgage payments, property taxes, and other housing expenses can be divided among co-borrowers. This eases the financial burden on each individual and can make homeownership more manageable.
- Potentially Better Rates: If all applicants have strong credit profiles, lenders may offer more favourable interest rates. Even if one person’s credit is weaker, the combined application could still secure a competitive rate.
- Path to Homeownership: For younger buyers or those living in cities like Ottawa, Toronto, or Vancouver, a joint mortgage can provide the only realistic path to owning a home. Pooling resources makes entering the housing market more accessible.
What are the Cons of a Joint Mortgage?
Despite their benefits, joint mortgages carry serious risks that should not be overlooked:
- Shared Liability: Every borrower is equally responsible for the entire mortgage debt. If one party loses their job or fails to pay, the other must cover the shortfall.
- Impact of Credit Issues: Missed or late payments affect all borrowers’ credit histories, not just the person at fault. This can make future borrowing more difficult for everyone involved.
- Relationship Risks: Buying a home together ties your financial future to another person. If a relationship breaks down, whether between spouses, friends, or family members, untangling ownership can become complicated and stressful.
- Legal and Financial Complications: It can be difficult to remove someone from the mortgage, refinance, or sell the property if disagreements arise. Court involvement may be necessary in worst-case scenarios, adding to the financial and emotional strain.
What Do I Need to Know Before Entering a Joint Mortgage?
Before signing a joint mortgage agreement, here are key considerations:
- Legal Agreements: A co-ownership or separation agreement is essential. These documents outline what happens if one person wants to sell, move out, or stop paying.
- Exit Strategy: Plan ahead for scenarios such as buyouts, refinancing, or selling the property. Having these discussions early helps prevent conflict later.
- Trust and Transparency: All parties should be upfront about their income, debts, and spending habits. Full financial disclosure builds trust and avoids unpleasant surprises.
- Future Plans: Consider job stability, relocation, or family changes that might affect long-term affordability. What works today may not work five years from now.
- Professional Advice: Consulting with a mortgage broker, financial advisor, and lawyer ensures you understand your options and legal responsibilities.
A joint mortgage can be a powerful tool for achieving homeownership, but it comes with significant responsibilities. The key is preparation: set clear expectations, put legal protections in place, and have open financial discussions before signing.
Are There Alternatives to Joint Mortgages?
Yes, there are several alternatives to joint mortgages. It’s worth discussing your options with a mortgage broker if you are considering a joint mortgage, but want to make the best decision for your financial situation.
- Securing a guarantor: A parent or relative can help you qualify for a mortgage without being on the title of the home.
- Tenants-in-common ownership: Allows unequal shares of ownership, which can be helpful for friends or family members contributing different amounts.
- Renting vs. buying: For some, renting remains a flexible and practical option.
How Can I Get a Joint Mortgage in Ottawa?
If you’re considering a joint mortgage in Ottawa, it helps to speak with a broker like The Chris Allard Mortgage Team, who can explain your options, compare lenders, and help you structure an agreement that works for everyone involved. Ready to get started? Connect with us today.
Frequently Asked Questions
Can friends get a joint mortgage in Canada?
Yes. Friends can apply for a joint mortgage if they meet the lender’s requirements. It’s becoming more common in high-cost markets, but a co-ownership agreement is essential to outline responsibilities and exit plans.
What happens if one co-borrower wants to sell?
Options include refinancing the mortgage in the remaining borrower’s name, arranging a buyout, or selling the home outright.
Is a joint mortgage a good idea for first-time buyers?
Pooling income and credit history can make homeownership more attainable and help first-time buyers enter competitive markets like Ottawa sooner.
Chris Allard’s experience in the field means he can get you offers with over 50 financial institutions lending in Ottawa. Every lender has many mortgage products they offer, which means Chris and his team will make sure a mortgage caters to your needs while also ensuring you get a competitive rate. Chris Allard is a proud mortgage broker of Smart Debt Mortgages, independently owned and operated. Smart Debt broker #12236.