With demand for large deposits from lenders, more people are turning to the idea of purchasing a property with their friends. Though this may be a tempting idea, it is important to weigh the pros and cons of this route. Keep reading to find out more.
The advantages of buying a house with friends
There are many benefits to buying a house. For example, when you have paid off your mortgage, your property will belong to you and could be worth far more than you initially paid for it. You can also increase the value of the property with home renovations. And sometimes, it can be even cheaper to buy than to rent. Buying with friends reduces the costs further as everything will be split between all of you based on how much each person pays.
What to consider
However, it is important to think about the trickier financial situations before you decide to buy together. Everyone involved in the transaction is responsible for the mortgage repayments. Therefore, if one person fails to pay their share, everyone is liable for the cost.
If you plan to put in different amounts for the mortgage deposits, you must also think about the proportion of the property each deposit amounts to and how you plan to split the proceeds should you sell.
You should always keep paperwork in order by ensuring documents are accessible to everyone and signed by all of the co-buyers. You must also discuss how you plan to pay for the costs of the property going forward. A joint bank account is one way to keep track, as opposed to having everyone pay from separate accounts.
Possible setbacks and how to avoid them
It’s important to always think about the worst-case scenario. Although joint ownership makes sense financially, this deal can only work if all angles are considered. Preparing a smart exit strategy is important.
- Think about who contributed to the furniture, renovation costs and more and create an inventory that is updated on a regular basis.
- Is everyone staying in the property for the same length of time? If one person wishes to move out before everyone else, they may need to find a tenant to replace them.
- Most problems can be put to an end if everyone is transparent with each other – having a solicitor can make this process easier.
- This might be your home, but it is also a business transaction and in many cases should be treated as such.
Find your perfect property share with Joules Estate Agents
Becoming a homeowner isn’t an easy process, particularly if it’s shared, but the right estate agent can help. Get in touch with Joules Estate Agents today to see how we can help.