In 2019, home ownership has become something that many people strive for, but simply can’t attain. With the average deposit needed to buy a home in the UK being a whopping £33,000, it is no wonder that a lot of people are put off the idea of buying their own homes.
However, the high deposit rates and limits on lending don’t have to mean that you can make that first step onto the property ladder, and it’s not something that you have to write off altogether. In fact, it may be a lot easier than you think to buy a home, especially if you consider buying with friends.
This is increasingly becoming an option for a multitude of people, but why is everybody opting to go into the housing market with their mates in tow?
You don’t have to save as much
Needless to say, if you’re going into home ownership with your friends, there is no need to save as much for the deposit.
Instead of attempting to bring the digits in your bank account up to £33,000, you’ll only need £16,500 if you’re sharing with one friend, or £11,000 if you’re thinking of getting another friend on board.
There are borrowing benefits for co-buyers
If you’re thinking of buying with friends, then you could find that you can borrow more from the bank than you would be able to if you went solo, because they will be looking at two incomes, and what you can both contribute to the mortgage.
On top of this, many banks now offer mortgage schemes that are specifically tailored to those who are buying with friends, due to the increased demand for these services.
Whilst some banks offer mortgages for up to 4 buyers, it’s important to remember that others limit this to 2 co-buyers. This shouldn’t prove to be too much of an issue, but shop around if you’re thinking of bringing more than 1 of your friends on board.
Are there any risks?
If you’re thinking about buying with friends, it’s vital to remember that you have a joint responsibility for the payments. This means that if your friend misses a payment, then you will have to pay their share, too.
You also need to make sure that you have some agreement in place, in the event that your friend wishes to sell their share in the property. However, there are many things that you can do to protect yourself here.
One of them, naturally, is to only go into home ownership with somebody who you know can be trusted to pay their share of the mortgage. Secondly, a formal deed of trust should be created, which states what will happen if one person suddenly decides that they want to sell their share.
You should also sort out how you’re going to split your ownership of the property, as there are a few different options out there, like tenants in common, which all affect who will inherit your part of the home, and the choices that you have over this matter.
Ultimately, however, if you take the right legal precautions, then you could benefit greatly from buying with friends. It’s a great way to get onto the property ladder, if you don’t have £33,000 sitting in the bank.
