Navigating the choppy waters of the property market could lead some homebuyers to consider pooling resources with a pal or live-in partner to cope with steep mortgage rates and lofty house prices. Teaming up might appear to crack the affordability issue, but there’s more to mull over when buying bricks and mortar in tandem.
Ben Thompson from Mortgage Advice Bureau explained that there are benefits to such a move: “The benefits of having a buying partner doesn’t just come from having deeper pockets for your deposit. It also gives you the chance of securing a joint mortgage, allowing you to borrow more together, so you can secure a larger and perhaps more suitable place to live.”
However, he flags important issues to consider: “There are potential downsides to a joint mortgage. For instance, a friend’s poor credit could impact your ability to borrow. It’s also important to remember if their financial situation worsens after moving in, you’ll both be equally responsible for payments. This could be challenging if they struggle to pay their share.”
Ben Thompson said ‘trust and confidence’ are the most important factors
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Trust and confidence in your co-buyer’s stability are key to sailing smoothly, Thompson advises. For those pondering a property purchase pair-up, he recommends expert advice to get your head around all the potential risks. Thompson also underscores that joint mortgages don’t always equate to joint home ownership—a vital distinction for would-be joint buyers.
Buyers have a few options, like going for a joint tenancy where both parties have equal rights to the property, or an arrangement that allows each person to own a different share. In some cases, individuals may purchase with family help but retain sole ownership.
Thompson advises: “It’s important to consider what type of ownership is best for you, and speaking with a mortgage adviser should help you decide what the most suitable option is.” He also notes that advisers play a crucial role in getting buyers mortgage ready, considering their future goals and current financial situation.
Sometimes, one owner might want to buy out the other, especially if friends who co-purchased decide to go separate ways. Thompson points out: “When buying with friends, it’s not like moving in as a married couple who have certain rights when it comes to sharing a home. Instead, those buying together need to be proactive and honest about the arrangement.”
He suggests protecting your interests with a cohabitation agreement, which details how finances and property are managed while living together and the protocol for any changes or disputes. Thompson emphasises the significance of such agreements, even if they seem negative at first: “you must not overlook the importance of protecting your respective interests and futures.”
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