Purchasing property with friends

Property can be expensive, but you may not have to shoulder the entire mortgage for one. Depending on your circumstances, you may find that you want to buy a property with one or more friends.

Here are some things you may want to consider if you’re thinking about buying a property with other people:

  • Share of ownership
    Will you and your friend or friends be putting in equal amounts towards the deposit and mortgage repayments? If not, you may want to agree to split proceeds on the potential future sale of the property depending on how much you’ve each put in. You can get a solicitor to draw up an agreement for you, and make sure that it’s recorded in the Land Register. A Declaration of Trust will record how you’ve agreed to split everything, from ownership to bills.
  • Decide if you want to have joint tenancy, or be tenants in common
    There are different types of joint ownership. Joint tenants have to act together in a legal sense. You can’t act based on your own share of the property – for example, you can’t sell your part of the property; all joint tenants would have to agree to sell the home. If you’re purchasing the property as ‘tenants in common’, you don’t necessarily have to have equal ownership of it. This means, for example, that you can sell your shares regardless of what your co-owners decide to do with theirs.
  • Use of property
    Will everyone who owns the property be living there? Will it be partly or wholly rented out? Knowing the details in advance can help you to decide what kind of property to buy.
  • Joint bank account
    You may want to open a joint bank account for mortgage repayments. It can also help to pay for shared expenses through this account.
  • Compare mortgage deals
    Shop around for the best deals and rates that you can get based on your circumstances. Typically, the better your credit rating, the likelier you’ll be to get a better deal. This would have to apply to everyone who will share ownership in the property.
  • Check your credit reports
    If you apply for a mortgage and get rejected, this will show up on your credit history. You and your friend or friends may want to check your Equifax Credit Report & Score (which is free for the first 30 days then £7.95 monthly) to get a sense of your credit history as well as an indication of how creditworthy a potential lender may find you. This way, if there are any glaring issues, you may be able to sort them out and improve your credit before applying for the mortgage.
  • Organise your paperwork
    Buying a property can come with a lot of paperwork. Having it organised will help to keep records to do with owning your home in order, and can help to ease any related confusion that may crop up.
  • Keep an inventory
    Who owns the TV or the sofa? Keeping a list of who bought what will help you to split up possessions if you decide to sell the property in the future.

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