When you own your property jointly with another person you will own it jointly as either Joint Tenants or Tenants in Common. This is regardless of whether you have a mortgage or not.
Briefly speaking when you own as property as Joint Tenants, the 'right of survivorship' applies and that means that when you die, your share in the property will automatically pass to the surviving joint owner/s regardless of what your Will states.
With a Joint Tenancy, the joint owners do not have defined shares and they both own 'all of the property'.
When you own your property jointly as Tenants in Common, you will have a defined share in the property and will own your property jointly with another person in either equal or unequal shares. This is often set out in a document known as a Declaration of Trust which is typically prepared when you purchase the property. When you own a property as Tenants in Common, you can leave your defined share in the property to whoever you wish in your Will, that will not pass to the surviving joint owner automatically.
Example if Joint Tenants
Simon and Denise own their property as Joint Tenants. Simon dies and the property automatically passes to Denise by the right of survivorship. Denise then requires care following Simon's death. Because Denise owns the property outright, the full value of the property less any outstanding mortgage/ loan secured on the property will be taken into account in her financial assessment and there may be a need for her to sell the property to fund her care.
Example if Tenants in Common
Richard and Susan own their property as Joint Tenants initially. When they discuss their Wills with their will writer they mention that rather than leaving their property to each other, they want to leave their property to their children. They want to protect their estate against costs of care because Richard’ mother, Helen had to sell her home to pay for her care. Richard and Susan decide to sever the joint tenancy over their property and become tenants in common in equal shares.
Richard and Susan each decide to leave their 50% share in the property to their children, with a life interest provision for each other. The life interest for each other, protects the surviving partner following first death and due to the terms of the Will and the life interest itself (known as a property trust) prevents a situation where the children can force a sale of the property. Susan then dies so her Will becomes effective. Her half share legally passes to the children at this time subject to the life interest for Richard.
Richard then requires care. Because Susan has left her 50% share of the property in trust for the children in her Will, her 50% share is safeguarded for the children and wouldn’t need to come into consideration when the local authority were calculating any contribution that Richard would need to make to his care costs.
As such, it can be extremely advantageous to sever the joint tenancy in relation to your property to protect some of your estate against future costs of care. This can also be the case where you are wishing to safeguard your share in the property for your children from any potential future relationship by the survivor or from them getting into financial difficulties for instance.