With house prices in the UK and particularly in the nation’s capital having rocketed in recent years, many people are opting to buy with a friend just to get that first foot, or half a foot, onto the property ladder.
But buying with a friend can often be awkward territory and it is important that you both know exactly what you want from the purchase before entering into an agreement. Knowing how long they plan to live with you, how they are funding the purchase and what they plan to do with the property in the long run is an important foundation to begin with.
Make sure you trust the person you plan to co-inhabit with and just as importantly make sure you are comfortable living with them first. Be open and honest about any concerns you might have about living as once the deal is done, it will be too late.
Ask your solicitor to draw up a declaration of trust or co-habitation agreement between both parties this way there are no grey areas and everybody knows where they stand.
Once this is in place there are a number of advantages when buying with a friend. As already mentioned the main advantage being the reduced cost. Not just the asking price but everything else that comes when budgeting to buy a house from deposits to Stamp Duty.
But just because you are buying with a friend, doesn’t mean that you or even your friend have to live at the property. You are well within your rights to rent your room to a tenant in order to cover some of the mortgage repayment costs and this is often the preferred route when buying with a friend. Buying a property with a friend is often an investment for the future rather than a lasting arrangement and could be that helping hand you need to one day buy a property yourself.
It has become increasingly common for mortgage lenders to offer mortgages specifically designed for those planning to co-inhabit and so finding a mortgage that suits your situation shouldn’t be the task it once was.
Don’t be afraid to ask for advice as everybody’s situation will vary financially however bear in mind that everyone involved in the process will be liable when repaying the mortgage. If one person falls behind and can’t make a payment, then you are all liable.
Again the key to success is to:
Be upfront about what you are entering in to
• Be honest about your financial situation and any issues that arise before or during the length of the mortgage
• Keep track of all payments made by each party to avoid any future disputes
• Although it may seem like a long way away, discuss and agree on a plan of action should one of you want to sell their share of the property
• Arguments are part and parcel of life, but resolving them to benefit both parties is the best route when sharing a property and having everything set out in stone prior to the process is an easy way of ensuring this.
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