With the amount of money you need to save for a deposit rising and the income multiples used by lenders falling, it has become difficult to get onto the housing ladder for most people. On the bright side for couples, a problem shared is a problem halved. Two people saving for a deposit, and two incomes to support the mortgage, should generally make it easier to buy a property. But what about if you are trying to do it on your own? It may take twice as long to save, and even then, your income may not be enough to allow you to access the size of mortgage which you would like.
A not so commonly used answer could be to buy a house with one of your friends. In terms of advantages, I believe it pretty much stops with the financial benefit. In terms of disadvantages, there are many, and great thought should be given before entering into such an arrangement.
The first thing you need to do is make sure you have a friend that is not only seriously willing to take on the idea, but also who you can trust financially. You may get along with somebody when you go out together, but would they pay the bills on time and not leave you in a financial mess? You need to remember that with a mortgage, and most of your bills, you are not each responsible for 50%, you are both 100% responsible. If your friend won’t pay something, you will have to.
Then you will find people who might be good with money, but you couldn’t live with. Living with a friend might sound like a good idea, when you imagine the good times you might have together, but you need to think about how they are going to be with the basics. It might sound simple, but there are some people who will have never emptied a bin, polished a table, hoovered or done the washing up and they may not be willing to start now. Also, one person’s idea of tidy may be very different from another and over time those dirty socks you find down the back of the couch and seeing the dishes pile up every day, may start to grind you down.
If you are considering getting a mortgage with a friend, I would strongly recommend renting with them first, you will learn a lot about them as a person and how they manage themselves financially. If it’s a nightmare, you can throw in the towel and forget the idea. If it works, then maybe you are ready to take the next step and look at buying somewhere together.
Another thing you need to remember is that although a couple’s natural progression involves staying together and moving up the housing ladder together into the future, it is more likely friends will want to go their separate ways at some point. In the past, with rising property prices this has worked quite well for friends because each party has taken their share of the equity and set up on their own, but with property prices not moving significantly at the moment you may find it more difficult to progress on your own.
Kieron Bassett Financial Services has two Independent Financial Advisers who specialise in mortgages. Contact us on (01524) 832057, via e-mail, info@kieronbassett.com, or visit www.kieronbassett.com.
Jason Hinde DipPFS
9th July 2012
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