Mortgage with a Friend -Pros & Cons

hivoodoodoll

Hi All,

I am a FTB and have been looking for a property since the end of last year. After the house I was going to buy fell through I decided to up my budget a bit as there wasn't much on the market around where I live for my original budget.

Anyway, a friend of mine is in the process of splitting with her partner and made a flippant comment the other day about getting a property together. I didn't take her seriously but today she said she thought we should sit down and talk about it some more.

If I was honest I would really like to live with her. We get on really well and I think it would work. I am quite a loner but it would be lovely to have someone to be able to go out with.

I have decded to put a list together of all the pros and cons of this joint partnership and I was hoping for some advice. She has a mortgage of around 150k and the house they have is probably worth around 400k. She is about 12 years older than me and my first thought is what would happen if either of us found a partner.

Has anyone been in this situation? Has it worked? What were the problems? I wasn't too sure where to post this (so you may see this somewhere else as well) but as we wll be needing to get a mortgage I thought I would start here.

I look forward to any advice you can give me.

Annisele

I think it sounds like a recipe for disaster.

At some point your circumstances (or hers) are going to change. That might not be a new partner - it might be a change of career, or your employer relocates, or redundancy, or ill health, or a sudden desire to travel the world...you get the idea. When that happens, what if one of you wants to sell and the other doesn't? What if house prices have fallen?

In the here-and-now, do you know her well enough to know if you want to link your credit file with hers and take on the biggest financial commitment of your life together?

If you're serious about buying together, I'd suggest renting together for six months first. Other peoples habits can get annoying over time (I once blew up at a housemate over some breadcrumbs on the kitchen floor - not my proudest moment). You won't find out if the two of you can live together until you've tried it, but you don't want to find out that you can't live together after you've just bought a house.

Edit: Double post - over on t'other board.

opinions4u

If you don't see yourselves living together forever, don't get a mortgage together.

Rent together by all means - there's usually a 6 monthly get out clause there.

One of you buy, one of you take on lodger status - not always perfect, but who owns what it clear.

But buying together may be fine now, but will cause inevitable pain later.

VT82

I've lived in this house with my friend as co-owners for four and a half years.

The pro's are the financial side. We've had a lodger for 3 and a half years (if you're gonna share with one person, it might as well be 2). As such, my cost of living is about 330 quid a month, which includes overpaying on the mortgage. Of this overpayment, about 140 quid is my share of the equity. So my cost of living is under 200 quid a month. Bonkers, but brilliant.

The negatives are that I really can't wait to leave. I now have a partner, and have progressed my career to the point where my quality of life is more important than how cheaply I can live. I don't want to live in a house with people who don't treat it the way I would if it was mine alone. I want to sell, but as the property has gone down in value, there isn't enough of a lump sum incentive for my co-owner to also want to sell.

It looks like I will move out and rent out my room. But that is really not ideal for me (although it will still be financially very good for me). In addition, I have lost a lot of respect for my friend (won't go into it here), and we won't be as good friends after we part home ownership than we were before we bought the house.

I'd probably do it again with the benefit of hindsight, but I probably couldn't, as we got very lucky with the timing of our arrangement; getting a 95% mortgage when they were cheap and easy to come by, and then the mortgage payments dropping down to peanuts. If it wasn't for the financial benefit which was more down to luck, I definitely wouldn't do it the same way again.

If you do go down this route, the most important part of any contract you draw up will be the exit strategy. Make it so that either one of you can force the house onto the market after 6 months' notice. It will make things much more straightforward in the future.

SouthCoast

I think it sounds like a recipe for disaster.

I agree!...........