Buying with a friend - FTB

secondtoughest

I'm considering teaming up with a friend to get a mortgage (depending on the market at the time). We're looking at properties at a maximum of £150k, and we both earn £24k (but a few k more if you factor in overtime).

I'll want a £20k deposit before I go into this so I'll need to borrow around £55k. He says he won't have a deposit and so will need the full £75k. He wants to pay interest only and I'd prefer repayment. We've both got steady jobs with good prospects but as he's a key worker he's got guaranteed salary increases.

How do these types of mortgages work? Is it like a normal mortgage only with different contractual obligations? I guess I'll have to bank the difference between the repayment and the interest only and make a lump sum payment to my half of the mortgage, if they allow me too.

Any advice, either from mortgage advisors or from anyone who's done this before?

herbiesjp

You say you will each borrow different amounts.

However you are not able to have two different mortgage for both of you - you have to be named on the same joint mortgage for £130k

It will be down to you to both safeguard your interests via agreements drawn up by the solicitors

CLAPTON

do think about it very carefully before you go ahead

as herbie says you will have to get a joint mortgage
you will probably have to get a joint bank account
you will be financially linked together so you will both be affected by each others credit rating

think about the exit strategy.. how will be divide the spoils when you want to terminate the agreement... write out a few examples
say suppose the price goes up 30,000 how will be divide the profit and more importantly suppose the price goes down by 30,000 (a real posssibility in the current climate)
what happens if one wants out the the other can't afford to buy the other out

also think about furniture and white goods etc... how will these be bought, suppose one is happy with cheap and the other not


also why will the friend have no deposit... if he can't save now how will they pay the mortgage?

secondtoughest

I didn't realise it linked our credit rating together like that, that's not something I want. He claims he's not able to save (we've had this out!) and I suggested cutting back etc but he wants to do it by borrowing the full amount and I don't.

If that's the only way it's possible then it's not something I'd be interested in. I thought there was some way to organise a joint mortgage in this way but there obviously isn't.

Thanks anyway!