House buying with friends

smeds

Me and 2 mates are looking at buying a house and i'm wondering if anyone has any experience in the mortgage process / general things that you would and wouldn't do?

mrginge

The first thing i wouldn't do is buy a house with friends.

Caladan

^ This.

It's extremely risky buying with friends, a lot can go wrong, people can fall out and if one of you wanted to get out of it they'd still be on the Mortgage so it would affect how much they could borrow on a new Mortgage if they wanted to strike out on their own.

On the other hand I've seen some people do it very successfully and make a tidy profit, but think long and hard before you go through with it.

To answer your question - Talk to a broker, 3 people on a Mortgage is allowed but it's messy and a broker will probably be your best bet to find the right deal.

Kind regards,
Cal

smeds

thanks for your comments, we would go to a solicitors prior to moving out and draw up a deed of trust which would sort out the if someone wants to leave etc.

holly_hobby

Mortgage wise

You can have upto 4 applicants on a mortgage, but only a max of 3 incomes, which will go something along the lines of ... 3 of main + 1 of 2nd + 1 of 3rd income.

If one of you want to move on and be released from the mge, which would be a transfer of equity, the remaining mortgagors income would need to be sufficient to service the mortgage, or the lender will prevent your release from the mortgage/your friends won't be able to secure a remortgage with an alternative lender to release you.

So your equity could be tied up for a while, and whilst you remain party to the mge (and as it isn't a BTL), the existing mge commitment would generally affect your onward purchasing power mge wise.

Life cover

You may wish to consider effecting income protection and life policies (in trust) in respect of death of either of you, and repayment of your share of the mge. Your adviser will guide

Ownership

If you wish to bequest your property share on death, to anyone other than your fellow owners and/or you each are to hold a difference % of equity, the property should be purhcased under a Tenancy In Common arrangement. (your conveyencer will guide)

Legals

You may wish to also have a formal record of whom contributed what to the deposit (and how it will be managed on disolvement of the arrangement), and how any free equity will be apportioned on sale and under what terms. Again your conveyencer will advise

Above are the very basics, think carefully about what can happen, probs of all living together etc , and if you're still happy explore your options.

Hope this helps

Holly

katy89_2

Hi this might not be useful but I watched a programme other night on bbc three about mortgages,house buying etc and there were three boys who bought together and they talked about what they had done.

It went along the lines of drawing up contracts and agreements even down to girlfriends etc. THey were really mature about it and covered a lot of points that could arise.

It may be worth while watching just to here what they say. Sorry I can't remember what it was called but I'm sure if you wanted to watch it, bbc I player bbc three search would no doubt bring it up.


X

TrickyDicky101

The problem with property is that it is a fundamentally illiquid investment that costs an awful lot of money. The illiquidity point may not mean much to you (it didn't to me before I bought my first house - and then tried to sell it).

Whilst signing up to a deed to trust is a good idea, it doesn't solve the problems that

1) You can't just sell a house just like that in x number of weeks - it could take months/years
2) Doesn't matter what the DoT says, if you want to leave and your housemates are unable or unwilling to raise necessary finance to buy you out, you are still liable for the whole mortgage (not just 'your' share - this doesn't exist, the mortgage debt is joint & several) whether you live in the house or not
3) If one of your friends starts hugging trees and bugs out to the nearest forest, you are still liable for 'his' portion of the mortgage debt (see above). Given this friend's new found love of nature and rejection of the capitalist society and the concept of money, the bank will chase you for the whole of the mortgage debt

It could make more financial sense in a vibrant and rapidly increasing property market, but those times are long behind us and don't currently look likely to return in the near future.

Why not rent together?

warehouse

Don't........

afly

When prices will only go up, as we believed would be forever, this was a smart move. If something went wrong you could just sell and part ways.

These days you can end up trapped together for years in a declining venture. I wouldn't recommend it

jackieblack

katy89 wrote: »

Hi this might not be useful but I watched a programme other night on bbc three about mortgages,house buying etc and there were three boys who bought together and they talked about what they had done.

It went along the lines of drawing up contracts and agreements even down to girlfriends etc. THey were really mature about it and covered a lot of points that could arise.

It may be worth while watching just to here what they say. Sorry I can't remember what it was called but I'm sure if you wanted to watch it, bbc I player bbc three search would no doubt bring it up.


X

They were renting, not buying - very different scenario
The point was that they could afford a much bigger, grander apartment between 3 of them, giving them a much better standard of living than they could afford if they all rented individually

ACG

Its not just the legal side of things, think about the other aspects...
Bills - are you going to get annoyed all paying a third into something knowing that one of your mates has 10 baths a week where as the rest of you have 1 shower a month?

Are any of you scruffy? Is one person going to end up being the nag of the group moaning that the other 2 are messy and dont clean up?

Food - eating eachothers food? This is usually a big no no in work, at home with your mates you might not be too fussed.... but you might be.

What happens when one you want to sell up? How will that work as it could potentially stop you getting another mortgage whilst you have this one.

Just think about the practicalities of living with your mates. It will be great for the first month, a few parties a bit of xbox or something and then it will hit that your tied in for the long term. Maybe rent together for 6 months, just check it works.

Ive been on a few holidays with my mates and within a week we are getting to the point of it being long enough unless we all just have our "alone time".