For many trying to get on the housing ladder, it’s tough in today’s market – even finding a 5% deposit isn’t easy. And it seems very unfair when you may have been paying out £1,000+ each month in rent, but the lender will only allow you to borrow enough for £800 a month mortgage.
A great way around this problem can be to buy with a friend. I did it and it worked out really well. But, and it’s a big but to consider, I was very lucky, we were both practical and fair with each other. When we needed to think through what to do with the house because my friend was getting married, we had already agreed to value the property based on three agent’s valuations. The result was the property was worth pretty much the same as we bought it, so we just decided her husband would take over my half of the mortgage and I’d have returned my deposit.
So, to help you buy and live smoothly with a friend, here are my 5 top tips:-
Choose the friend you buy with wisely
You will be taking on a serious financial asset when purchasing a home, so buying with someone who is frivolous rather than cautious with their money isn’t necessarily a good idea! And if you have someone who doesn’t like spending money, this could mean you having to fork out for repairs you know are necessary while the co-owner says it’s not worth doing. A classic argument might be a new boiler would be a good idea financially long term, but more expensive in the short term than getting the current one fixed.
How will you decide on what’s needed for the property and what will you do if you disagree?
Make sure you keep track of what you both spend
It is likely there will be things you will need to pay for such as new fixtures and fittings, like carpets and curtains when you move in, plus appliances like a washing machine and dishwasher. This kind of expenditure can add up to thousands of pounds, so it’s important to keep a tally of what belongs to whom and what’s been spent. Then you should have a regularly updated amount of money you have both put into the property which needs to be paid back to the other person should you decide to split for any reason.
Keep a constant track of who spends what on the house and its fixtures and fittings.
Agree upfront how you will share ‘chores’
It’s not just the big things you need to keep track of but the little things too. Who is going to do the cleaning of communal areas? Will you have a ‘joint pot’ for cleaning products? What about the upkeep of a garden if you have one? Who will sort out the loo or sink if it gets blocked? What if the property needs re-painting?
Make sure you agree how you will keep the property clean, tidy and well maintained
Who will own what?
Be very wary of agreements which mean one person puts in a large part of the deposit while the other pays for more of the mortgage. This can get very messy if you decide to split up and my advice would be firstly to check with a lender or broker whether they will be happy with this arrangement and secondly have a legal contract which states – whatever happens – who takes what out of the property after sale or if it’s let.
Have an agreement of what happens if you fall out or things go wrong
On the one hand, having a home of your own – even shared – is lovely. But it’s not so nice if you own a home with a friend who you fall out with, or who gets sick or loses their job and can’t pay their share of the costs or indeed wants to sell up and move on with their life.
The only way to deal with these situations is to have an agreement in place which will work for both of you, even if you are not talking! This needs to be drawn up by a solicitor who knows what it is like to be in this situation, so contact us if you need to find someone.
Ensure you have a strong agreement in place, just in case things go wrong.
I hope the above tips are useful, but if you need any more help, contact us or sign up for free for our First Time Buyer checklists For more help with buying your first home, visit our FTB checklists.
And don’t forget to come and have a chat with me at the First Time Buyer Show Saturday 10th May 2014.
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