Buying a house is still out of reach for many first time buyers. Sharing the costs with friends or family can seem like a good idea, but what do you need to know before you take the plunge?
It can certainly be a good idea if you do it properly. There are lots of potential advantages, but there are also pitfalls to be aware of and deal with before you buy. Doing your homework before you go ahead is a must.
Sharing the cost can make getting on the housing ladder more affordable. For instance, a deposit, purchase fees and mortgage payments can be shared amongst you.
Once you move in, you'll also be able to share the cost of maintaining the property and bills such as council tax.
There are some, but most can be overcome with careful thought and planning.
For example, should your (or your purchase partner's) circumstances change, you might run into difficulties agreeing how bills should be paid, or even what to do with the property.
Example 1: It is important to remember that each person will be responsible for mortgage payments. If one should fail to pay up then you will all be liable to cover the shortfall.
Example 2: If you want to move away you cannot sell the property to release funds unless your partners agree.
If they don't want to sell, they may be interested in buying your share from you, but this can be a complicated process - particularly agreeing a price. If that is not possible then you may have to rent out your room in order to cover costs.
Really this is just about taking sensible precautions. First and foremost, only buy a property with people you know well and who you trust.
Secondly, you must put a legally binding cohabitation agreement in place before you buy, to make sure that your investment is protected. A cohabitation agreement should be drawn up by a qualified solicitor and should cover as a minimum:
It is also very important that each partner has a will and testament in place, as well as life insurance.
Once you have bought, it is a good idea to keep detailed records of all costs you incur, from deposit and mortgage payments to bills and maintenance costs. This will help you to avoid arguments later.
Remember, a financial association with someone on your credit report can have a big impact on your finances. Watch this video for top tips on what to look out for.
It depends on the circumstances of you and your purchase partner - particularly income and credit rating.
Clearly, a lot depends on your means and your circumstances, however, it is better to go for something that you would be able to sell quickly, should the need arise. That might include:
There are a number of things you can do to make living together more comfortable and avoid arguments. You might consider:
Whether you are looking to move up the property ladder, downsize or just relocate we can help you find the right mortgage when you move home.