Living with people that you get along with is an ideal scenario for any person. When you choose to buy a house with other people, it often becomes more affordable to do so, and is therefore an attractive proposition.
So, if you are thinking about buying a house with a group of friends, what do you need to keep in mind? What are the pros and cons of doing so – and how exactly can you achieve this?
Read our blog below for clear information about buying a house with your group of friends.
Advantages of Buying a House With a Group of Friends
It can often be cheaper per-person when a property is bought with a group of friends. This is because, in most cases, the group of people will share the costs involved with buying the house – including legal expenses, the deposit, and so on. You will also be able to split the cost of bills (such as utilities) once you begin living there.
Buying a house with a group of friends also helps to guarantee that you will be living with people you like, after the purchase is made. This can make for a more enjoyable living experience, compared with living with a complete stranger, or living on your own. It is common for a group of friends to buy a house together after living together at University, because they already know that they live well together.
Drawbacks of Buying a House With a Group of Friends
There are some disadvantages to buying a house with a group of friends.
Firstly, it can be challenging to organise all the paperwork and finances you need in the house-buying process. Even in a group of friends, you cannot guarantee that everyone will be organised and quickly provide everything you need. It can be challenging to get all the paperwork needed from everyone – so be prepared for this hurdle.
It can also be difficult to keep a record of who owns which items when a group of friends live together. In the early days, it is important to keep a clear list of who owns everything (the microwave, the television, the sofa, etc.) but as new things get brought into the house, this can be more of a struggle.
Thirdly, it is important that all the friends you are buying with can be trusted. All parties involved in the co-buying agreement are equally liable for the payment of the mortgage, so if one person does not pay the mortgage then everybody else must pay it. One person’s poor credit score may also hold you back when buying as a group – so be prepared for these types of obstacles.
What is a Joint Mortgage?
A joint mortgage makes it possible for two or more people to buy a property together. This option is often taken by groups of friends who will be living together in the property.
A joint mortgage typically allows both parties to live in a more expensive house than they would otherwise have been able to afford. This is because the combined wealth of two people allows them to put down a greater deposit (and make larger monthly mortgage repayments) than they would’ve been able to do on their own.
Mortgage lenders also view a joint mortgage as a ‘safer bet’ than a mortgage for one individual. This is because you have two incomes to cover the repayments, rather than one.
How to Buy a House With a Group of Friends
There are several different ways that a property can be bought with a group of friends. The three main methods include:
- Joint Tenancy
- Tenancy in Common
- Shared Ownership
A ‘Joint Tenancy’ in the UK means that everyone has equal rights over the property. This means that profits are split equally if the house is sold.
A ‘Tenancy in Common’ means that everyone owns shares in the property – and the number of shares owned can vary from person to person. A ‘deed of trust’ will provide information on how many shares is owned by each person.
Shared Ownership is when you take out a mortgage on a share of a property, and pay rent to a landlord on the remaining share. For example, you/your friends might buy a 50% share in a property, and pay rent to the landlord on the remaining 50%.
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