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EXPERT ADVICE

Through thick and thin?

If you’ve ever considered buying a property with a friend, read on for
everything you need to know.

s property prices have increased while 46% of first-time buyers would consider
wages have stagnated, it’s becoming buying a property with friends or siblings, and
A more and more common for would-be in response to this demand, some lenders now
homeowners to seek out alternative solutions even offer a ‘mortgage for four’ to cater for the
to help them take their first steps on the growing market.
property ladder.
However, buying a property with joint
For single buyers who don’t have a partner to ownership always comes with risks – and Research conducted by
split the cost of a property with, it can feel like potentially there are more risks when buying Lloyds Banking Group in July 2024.
an uphill battle to secure the home you’ve been with a friend than with a life partner. So, what
dreaming of – which is why more buyers are do you need to know before taking the plunge? “Finally, both parties should enter into a written them doesn’t pay their share of the monthly
considering purchasing a home with a friend agreement that details what would happen mortgage payment, the other party will be
instead. Research from Lloyds Bank showed Gavin Pearson, Senior Legal Director at MOV8 if one wished to sell and the other doesn’t, in fully responsible.”
Real Estate, says: “You need to firstly think terms of how long the person would have
about how close a relationship you have, and to buy out the other party’s half share, failing Gavin agrees: “In relation to any joint
whether it will survive living in a property you which, the property would need to be sold. An mortgage, the liability for the mortgage
own, as opposed to a property you may have agreement such as this would be vital in the payments is joint and several, meaning
been joint tenants in. You’ll need to consider situation where one party was contributing a that in the event of default on payments,
the need to lay down and stick to agreed larger portion of the purchase price than the the lender would be able to pursue one of
boundaries in relation to matters such as the other party, to regulate the unequal split of the the two parties for the whole amount, with
use of common areas (like the kitchen and sale proceeds.” that party having to recover the other’s
living room), and how you split the use of half share.”
appliances and storage areas.
David Lauder, independent mortgage adviser at
ESPC Mortgages, says: “Typically, the mortgage Buying property with a friend can be a
“More seriously, you’ll need to agree in detail, when buying with a friend will be the same as any fantastic way to get onto the property
and in writing, the split of utility bills and which joint application, based on joint circumstances ladder, and a way to solidify your bond
providers you’ll use. Consideration needs to be and commitments, with both parties being for life (and make excellent memories
given to who may use more electricity or gas, jointly and wholly responsible. If the parties in the process). But before you take the
if, for instance, one of the parties works from are contributing unequal shares of the deposit, leap, make sure you have some frank and
home. You’ll need to agree the basis for bills to then legal advice is very important to iron out an serious discussions about all eventualities,
be split, and how usage would be monitored. agreement outside of the mortgage agreement. to make sure your friendship will survive
In addition to agreeing in detail the mortgage Both parties must also understand that if one of the test of homeownership.
payments, you should consider setting up
a joint bank account from which you’ll pay
the mortgage and utility bills, and possibly a
The information contained in this article is provided in good faith. Whilst every care has been taken in the preparation of the information, no
second account from which you can fund any responsibility is accepted for any errors which, despite our precautions, it may contain.
repairs or maintenance.
The initial consultation with an ESPC Mortgages adviser is free and without obligation. Thereafter, ESPC Mortgages’ charges for mortgage
advice are usually £395 (£345 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A
MORTGAGE OR OTHER LOANS SECURED AGAINST IT.
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