There have been a number of enquiries from first-time buyers looking to share with their friends in order to financially subsidise their first home.
With this in mind, independent mortgage broker Private Finance has provided five key-tips for gaining access to valuable finance when purchasing property with a friend.
Straightforward
Experts at Private Finance describe co-borrower mortgages as more straightforward to obtain, due to lack of discrimination towards co-borrowers that are not related or married. However, the broker has issued the following five top tips for ensuring the best possible chance of obtaining finance for co-habiting friends:
- Talk to legal experts
Anyone looking to purchase a house with a friend should make sure that they have formal legal agreements in place. This agreement should take into account all possible future eventualities where circumstances could change. Examples of these changes could be one friend getting married or a disagreement leading to one or more friends wishing to leave.
- Don’t hide finances
When buying a home with a pal, discussing finances could be something of a sticky point, especially if one investor is considerably wealthier than the other. However, it is better to be upfront from the beginning over how much each person has in the bank. If friends are not prepared to disclose their personal information which each other, then they are certainly not right to live together!
This is particularly important when considering a mortgage, as both credit profiles will be linked.
- Look around for the right deal
Not only for friends buying together but for anyone looking to purchase a property, searching around for the right mortgage is extremely important. For young friends, short-term mortgage deals are the most obvious and popular choice. There could be advantages for one product over another, which is why it is important for all borrowers to seek sound legal advice before pressing ahead with plans.
- Make a joint account
By making a joint account, the job of sorting out bills and other joint expenses is taken away from one person, thus reducing the risk of disputes.
- Keep a list of what is shared
The simple drawing up of an inventory of shared items in the legal agreement is very advisable before purchasing a house. Once again, this will negate the chance of any disagreements should one party come to move out.