Buying property with friends? Here’s what to look out for
For many young people, getting on today’s property ladder is prohibitively expensive. One potential solution is to club together with friends to co-buy somewhere to live.
Research1 shows that three out of five millennials (60%) would take out a mortgage with friends, with some providers offering a ‘mortgage for four’ to cater for this growing market.
LOOK BEFORE YOU LEAP
Getting a mortgage with your friends is a big commitment, no matter how well you know and trust each other. So, here are some things to consider before taking the plunge.
TEST THE WATERS BY RENTING
Pooling your finances and sharing a living space can put a strain on even the closest relationships. Renting together first for six months or a year may be wise to ensure you’re happy to go one step further and commit to home ownership.
SORT OUT THE LEGAL NICETIES
There are two types of ownership when co-buying a property: tenancy in common and joint tenancy. Tenancy in common is usually advisable for friends purchasing together. It means they each own a particular share of the property and it enables them to leave their share to whomever they choose in their Will.
NAIL DOWN YOUR ARRANGEMENTS
A cohabitation agreement will outline who owns what. It can detail how mortgage and other payments will be split, how joint possessions acquired during the tenancy will be owned and how those assets will be divided if the friends go their separate ways.
1M&S Bank, 2018
As a mortgage is secured against your home or property, it could be repossessed if you do it happening. not keep up mortgage repayments.