Joint loans: how borrowing in two names works

A joint loan is a credit agreement you sign with another person, and the rule that governs everything about it is joint and several liability: you are both liable for the whole debt, regardless of who spent the money¹. That means you are not responsible for "your half". If the other borrower stops paying, dies, or goes bankrupt, the lender can come to you for the full amount outstanding¹.

Joint borrowing is common in the UK, most often as a joint mortgage between couples, but also between friends or family members buying a home together². Two incomes can mean a lender will offer more than one income alone would, and lenders usually allow a maximum of 5 times annual income on a joint mortgage³. The trade-off is a lasting financial link: a joint loan connects your credit files, so the other person's money troubles can affect your ability to borrow, even after you separate⁴.

What a joint loan is and who can take one out

A joint debt is any financial contract you share with someone else, such as a mortgage, loan or bank account². It is a credit agreement you sign with another person, and from the moment both signatures are on it, you are each on the hook for everything borrowed¹. StepChange describes the position plainly:

The people on the agreement do not have to be a couple. Joint mortgages, for example, allow a parent and child to buy a property together, with both names on the mortgage and the property deeds⁷. Joint mortgages are usually shared by two people, but some lenders allow up to four borrowers⁸. Friends, siblings and other combinations can borrow together, though lenders will assess the arrangement on its own merits.

The legal definition is broad. Under the Debt Respite Scheme (Breathing Space) regulations, a "joint debtor" is a person who is jointly or severally liable, or jointly and severally liable, with a debtor for a debt, with one exception: someone whose liability arises solely as a result of an indemnity or guarantee, and who has no other liability in relation to the debt, is not treated as a joint debtor⁹. In practice this means a guarantor stands in a different legal position from a co-borrower, a distinction covered on the page about guarantor loans.

Sharing a rental agreement or a mortgage means you have joint debts, and action can be taken against both of you if the debt goes unpaid¹⁰. That is worth weighing before signing anything with anyone whose finances you do not know well, because the link you create follows both of you for as long as the debt exists.

Secured, unsecured and overdraft: the types of joint borrowing

Joint borrowing comes in the same forms as sole borrowing, and the type matters because it determines what the lender can take if things go wrong. The broad split is between secured and unsecured credit, and the most common form of secured lending is a mortgage¹¹.

Unsecured joint borrowing includes personal loans, overdrafts and credit cards. Most overdrafts, credit cards, catalogues, store cards and personal loans are unsecured, meaning they are not tied to an asset such as your home¹². An overdraft is a type of loan that often has interest, borrowed through your current account¹³. Credit cards, unsecured loans, store cards and unsecured overdrafts are usually treated as non-priority debts when a borrower gets into difficulty, which affects the order in which they must be repaid¹⁴. Commonly used credit products include credit cards, overdrafts and payday loans¹⁵.

Secured joint borrowing is tied to an asset, usually property. The most common form is a mortgage, where the loan is secured on the home¹¹. Bridging loans are another form of secured short-term lending, offered by providers including LendInvest, MT Finance, Precise Mortgages, Together Mortgages and United Trust Bank¹⁶. The Bank of England breaks repayments of lending secured on dwellings into three types: regular repayments, repayments on redemption, and other lump sums¹⁷, which reflects how large and structured this market is.

Joint bank accounts with an overdraft are a form of joint borrowing in their own right. Each account holder can withdraw money without asking the other person, and an overdraft on the account is a debt both are liable for¹⁸. The page on secured versus unsecured borrowing compares the two in more detail.

One specific joint arrangement worth noting: you can guarantee a loan for a spouse or partner, but only if you have separate bank accounts¹⁰. This is the guarantor route, where one person backs the other's borrowing rather than sharing it, and it is explained on the page about guarantor loans.

Combined income can mean borrowing more

The main practical attraction of borrowing in two names is capacity. How much you can borrow on a joint mortgage depends on both your incomes¹⁹, and lenders usually allow a maximum of 5 times annual income³. Two incomes can therefore support a larger loan than one, which is why most couples buying a home take a joint mortgage.

Lenders run a credit check on each applicant before granting a mortgage, and if one party has a poor credit score, it could impact the lender's decision⁵. In other words, the weaker credit file can drag down the application for both. If there are more than two people on a mortgage, lenders will normally only take the income of the two highest-earning people into account when deciding how much to lend⁸.

Joint borrowing is also used for debt consolidation, where existing debts are rolled into a single loan, either through secured borrowing against an asset such as a property, or through further unsecured borrowing²⁰. Consolidation can bring a lower rate of interest, lower monthly payments, a known end date, a single monthly payment and dealing with only one lender²¹. But the risks are real and apply to joint consolidation loans as much as sole ones:

• The payments could be bigger or last longer, and you might end up paying more overall²²
• The added interest may not be cheaper than what you are paying now²³
• Interest could be higher than what you are paying now²⁴
• Repayments may be spread over a much longer period, possibly costing more in the long run²⁵
• Missed or late payments can create more problems, so you need to be really sure you can keep up with the repayments²³

Taking out a loan also means taking out more credit, which could itself affect your credit score²³. The page on debt consolidation loans covers the trade-offs in full, and the page on loan affordability checks explains what lenders must check before lending.

Each borrower owes the full amount, not just half

This is the single most important rule on this page, and the one most often misunderstood. You and the other person are both responsible for the whole amount of money owed in a joint debt, not just your own share or "half"². Joint and several liability means you agree to pay back the whole debt if the other person does not pay, and you are responsible for the whole amount borrowed⁴.

The rule bites hardest in Scotland on joint accounts. Where a creditor takes money from a joint bank or building society account, the creditor is entitled to the full amount if: only the account holder who is in debt paid money into the account, the debt was incurred jointly, or the account is in the joint names of a couple with equal liability for the debt²⁶. So a lender recovering a debt can take the whole balance from a joint account, not just the other person's "share" of it.

In practice, this means an informal arrangement between borrowers, such as "you pay half, I pay half", binds nobody but the two of you. The lender is not a party to it. If one of you breaks it, the lender can pursue the other for everything, and any private agreement to split the debt is a matter between the two borrowers to sort out themselves.

How a joint loan links your credit files

Taking out a joint loan creates a financial association between the borrowers on their credit files. Lenders can look at the other person's credit history when you apply for credit, even if you apply in your own name only⁴. The Information Commissioner's Office puts it directly: where partners are financially linked, the lender can have full access to your credit file in the same way it could if it were you applying for credit²⁷.

The link arises from joint credit applications, joint bank accounts or joint financial products, and it continues after divorce or separation⁶. Opening a joint account adds a financial link, so companies look at both credit histories, and a poor history on the other side might lower your chances of acceptance²⁸. MoneyHelper's guidance on choosing a bank account is blunt about the risk: only consider opening a joint bank account with someone you trust, as it could damage your credit score if they have poor credit, and you could be responsible if they run up debt²⁹.

The association matters most when the other person's finances deteriorate. If you have a joint debt with an ex-partner, such as a mortgage or a loan, your credit files are connected, and how you manage your debts will affect your ex-partner if they apply for credit, and vice versa³⁰. The page on how loans affect your credit file explains the mechanics in more detail.

Closing the joint account will not remove the link from your credit file²⁸. A notice of disassociation can be requested from the credit reference agencies, but only once there is no other financial connection between you, which in practice means the joint debt must be dealt with first²⁸. How to do that is covered below.

Missed repayments: what happens to both borrowers

Missed payments on a joint debt are marked on both credit files, regardless of who missed the payment⁴. National Debtline makes the point in terms of separation, but it holds at all times: if a payment is missed, it will be recorded on your credit file as well as the other borrower's, even if the other person agreed to repay the debt⁶. On a joint mortgage, a missed payment shows up on both credit reports, regardless of whose fault it was⁵.

Both borrowers feel every stage, from the first missed payment to the lender pursuing either one for the full amount.

The lender can pursue any one of the borrowers for the money if someone fails to pay¹⁹. If one person cannot or will not pay, this leaves the other responsible for the whole debt⁴, and StepChange's guidance on separation states the rule without qualification: you need to repay the full amount yourself if your partner cannot pay³³.

There is one boundary to the damage. Missed payments on debts that are solely in the other person's name do not show on your credit file⁶. The financial association lets lenders see the other person's history, but their sole-name arrears are recorded as their liability, not yours. The distinction between joint and sole debts after a split is covered in the next section.

If you are already struggling, the page on what to do if you can't repay a loan sets out the first steps, and the debt section explains the free help available.

Separation and divorce do not end the debt

A divorce only ends the marriage; it does not end the financial connection between you and your ex-partner⁶. Getting divorced does not change who is responsible for credit debts such as credit cards, loans or overdrafts: the person whose name the debt is in remains liable, and on a joint debt, both of you remain liable⁶. Any private agreement between divorcing partners about who pays what does not bind the lender, which can still pursue either borrower for the full amount.

The credit file link survives too. The financial association created by a joint application, joint account or joint loan continues after divorce or separation⁶, and while a joint debt remains, there is no way to remove the link until the account is closed, repaid in full, or the ex-partner's name is removed. For a loan, that means the link can only be removed once the loan is repaid in full; for a joint bank account, removal is only likely once there is no overdraft to repay⁶.

Once the joint account is closed, you can write to the credit reference agencies to request a disassociation from that individual²⁷. Until the underlying debt is settled, that request will not succeed.

Two pieces of official support are relevant here. In Scotland, legislation on debt payment programmes extends the circumstances for a payment break to cover cohabitees separating³⁴. And under the Debt Respite Scheme (breathing space), if one joint debtor is granted a breathing space, creditors can still charge the other people interest or fees, and the breathing space does not affect the other people's debts and liabilities in their own names³⁵. In other words, protection granted to one borrower does not automatically shield the other.

When one borrower dies

Joint debts do not go away if one of the people named on the agreement dies. Instead, the other person becomes responsible for repaying the full amount of the debt¹. On a joint bank account, if an account holder passes away, the account continues in the remaining names²⁸. On a joint mortgage, the surviving borrower owes the whole balance.

This is why protection insurance matters for joint borrowing. Shelter Cymru's guidance on joint mortgages notes that it is likely to be important to have mortgage protection insurance to pay off the loan if one of you dies¹⁹. Joint life insurance is a policy taken out by two people, typically a couple, that pays out on the death of the first policyholder during the term, after which the policy ends and does not cover the surviving partner³⁶. First-to-die cover pays out on the first death, while second-to-die, or survivorship, cover pays out only after both policyholders have passed away³⁶.

The main disadvantage of joint life insurance is that you get only a single payment per policy, even if both policyholders die during the term³⁶. Some households combine policies to work around this: one example given by Which? is a couple with a £250,000 mortgage and children holding a joint decreasing term policy of £250,000 plus a joint level term policy of £250,000, giving £500,000 of cover in total³⁶. The protection insurance section explains the options.

When someone dies, repayment of personal loans, credit cards and credit debt must generally wait until other debts have been settled, and if cards are held jointly, any debts will be the joint holder's responsibility³⁷. The rules on debts after death are covered in nidirect's guidance³⁷.

How to apply for a joint loan

Applying for a joint loan follows the same process as a sole application, with both applicants involved at every stage. If you are buying a property with someone else, you will need a joint mortgage¹⁹. The lender runs a credit check on each applicant, and both incomes are taken into account when working out how much to lend⁵. The page on how to apply for a loan covers the practical steps.

Both applicants must sign the credit agreement. For loans secured on a home, the paperwork requirements are strict: for Support for Mortgage Interest loans, both people named on the mortgage need to sign the correct loan documents before the loan can be granted³⁸, and for joint claimants, both members of the claim are required to sign both the Loan Agreement and the Charge Form³⁹. The same principle, both signatures required, runs through secured joint lending generally.

Ownership of the property interacts with the borrowing. If you own as joint tenants or tenants in common, additional loans cannot be taken out on the property without your agreement⁸. Before applying, it is worth checking how the property is held, because it affects what either borrower can do unilaterally.

If the worst comes to it, joint bankruptcy is also a joint procedure: a couple must submit two sets of forms and pay two lots of bankruptcy fees⁴⁰. And when only one of you goes bankrupt, the other person named on the joint debt becomes responsible for the whole debt⁴⁰, which is the same rule as always, arriving by a different route.

Where to get help if a joint loan goes wrong

Free, independent help exists, and joint debts are a standard part of what these services deal with. StepChange, National Debtline and Citizens Advice all publish guidance on joint debts, and MoneyHelper offers free guidance on joint accounts and on dividing the family home and mortgage during divorce or dissolution³⁰.

For mortgage arrears specifically, when faced with repossession, contact your solicitor or a free advice agency⁴¹. If your lender has signed up to the Mortgage Charter, you could get help from them if you are having problems with your mortgage⁴². In Scotland, the cost of living campaign signposts support with rent and mortgage difficulties⁴².

If a complaint about the lender itself is needed, the route is set out on the page about complaining about a lender, and the debt section explains the full range of debt solutions and where to get free advice about them.