Buying with friends

Posted on April 2nd, 2018

With the average first time buyer now in their 30s it’s not surprising that some buyers decide to team up with a friend of relative to get on the property ladder. Raising a deposit as a pair or a group is much easier than doing it on your own, as too is managing mortgage repayments.

If you’re thinking of buying a property with a friend here are some things you need to know.

How many people can join forces to buy?

Legally a property can have four joint owners.

What type of joint ownership are there?

There are essentially two types of join ownership. Joint tenancies are usually used by married couples or people in relationship. Tenancies in common on the other hand tend to be used when friends or relatives buy together.

What’s the difference?

A joint tenancy means, as suggested, nobody owns a share of the property but rather it is owned as a whole jointly. This means if one of the owners were to die, the property would belong to the surviving owner.

A tenancy in common sees the property divided up into shares and not all shares have to be equal. If a tenant in common died their share of the property would pass to whoever they had left it to in their will.

How will the mortgage work?

While up to four people can buy a property together, the lender may only consider the two highest incomes when assessing how much you can borrow.

Despite this, all of the owners will likely be classed ‘jointly and severally’ liable. What this means is should one of the group stop paying their part of the mortgage, the rest of the group will have to cover the shortfall.

As such it’s always a good idea to have a ‘contract’ or agreement drawn up which details what happens should someone stop paying or want to move out of the property. This agreement should cover things like how the property is sold and whether the rest of the group should be given the chance to buy out the person who wants to leave.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage.