Joint Mortgage query

Indigo73

Hi

I’d appreciate thoughts and advice on the following.

I’m 42 years old, earn £35,000 pa, have no debts but no deposit saved and I’ve always rented. I’d like to get onto the property ladder but, given that it will take a considerable amount of time to save a deposit and with each year that passes the number of years’ mortgage term I would be eligible for decreases increasing the monthly repayments accordingly, it’s not a great situation!

However, a friend of mine has just made me a proposal! He’s also 42, a company director on £60k, owns his home and has £20k that he wants to invest in property. He was going to buy a property where he lives and rent it out but has offered to buy in Windsor, where I live and work, and take out a joint mortgage with me. We’d be looking at a £200,000 property, he would put his £20k in as deposit and would have a £80k mortgage share and I’d have a £100k mortgage share. We’ve calculated the income we would need from the property to cover the mortgage repayments, insurance, maintenance, ground rent (if applicable), etc. and to give my friend a 4% return on his £20k, which is what it’s currently earning. The plan would be that, rather than rent it out, I would live there and pay the amount that we’ve calculated we’d need. My friend would therefore get his 50% share of any resale profit and not have the hassle and cost of finding a tenant and I’d be paying what I’d be paying anyway in rent but have a foot on the property ladder and 50% of any resale profit.

I’d be interested to know if:
a) this seems like a good idea
b) we’d be likely to get a mortgage
Many thanks
Indigo

observations_from_a_hill

Sounds like a recipe for disaster to me. Can you afford the full £180k mortgage (for which you would be jointly and severally liable) if your mate's business/marriage/mental health broke down?