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Boomin Answers: Should I Buy a House with Friends?

Pooling your money together to buy a house with a friend can seem like a good idea, but don’t let yourself be swayed into it without careful consideration.

Faye deGavre

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Jul 13, 2021

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4 min read

Boomin Answers: Should I Buy a House with Friends?

With soaring house prices in the UK, stepping on the property ladder is an increasingly difficult task for many first-time buyers. In addition to the pile of cash needed for a deposit, the monthly mortgage payments can be a struggle with only one income. This has led many people to consider buying a house with a friend. You get to live with your mate, share costs and get on the property ladder – what’s there not to like? To help you decide if co-buying a house is right for you, here’s what you should know.

Can you get a joint mortgage with a friend?

You can get a mortgage with a friend just like you can a partner or family member. Lenders will look at both of your credit scores and financial histories, in addition to your income and debt to judge what size loan you can get.

Can me and my friend buy a house together? That answer squarely relies on your finances. Keep in mind that in the eyes of the lender, you’ll both be liable. That means the mortgage company is entitled to go after either one of you for repayment. So, if your friend frequently falls behind on rent currently, you could be looking at covering their mortgage payments if you go in on a joint mortgage.

It’s best to enter into a financial conversation with your friend early on to ensure you’re both committed to the immediate and ongoing expenses of buying a property.

Are there benefits to buying a house with a friend?

There are plenty of benefits of buying a house with a friend, but most people choose to do it as it allows them to move up the property ladder sooner and easier than they would buying solo. There are also the added benefits of:

  • Shared deposit
  • Shared initial costs
  • Larger mortgage
  • Shared mortgage payments
  • Shared maintenance and upkeep expenses
  • Formal deed and agreement in place (where joint owners draw up a deed that means disputes are more easily solved than when buying a property with a spouse or partner)

When you consider that it’s taking first-time home buyers an average of 6.6 years to save for a mortgage deposit (11 years for London), buying a property with someone you trust can speed up this process.

What are the drawbacks of buying a home with a friend?

You want to buy a house with your friend Bob because he’s a good guy and always picks up the next round at the pub. What could go wrong? But even if your friend seems financially stable, if they run into difficulty paying the bills, you may be expected to cover their share.

Things can get tricky when circumstances change. If you or your friend want to move away, you can’t sell the property to release the funds unless both parties agree. If Bob doesn’t want to sell, he can buy your share from you, though this can be complicated.

Can I protect the cash I put in?

When buying a house with a friend, it’s wise to decide the type of ownership early on.

  • A joint tenant agreement means the property ownership is split evenly. If one owner were to pass away, the whole property would legally belong to the other owner, regardless of any wills.
  • Tenants in common (or joint owners in Scotland) specifies how much of the property each party owns. If one owner dies, their share of the house will go to whoever is specified in their will, rather than being passed to the other owner. Having ownership of a specific share of the property typically means it’s easier to work out how much of the equity should go to each party once they decide to sell the house.

No matter how close a friendship you have, it’s well worth drawing up a cohabitation agreement as an insurance against possible disputes. Friendships have sunk over far less. The agreement will cover the deposits paid by each party, mortgage repayments required, house rules, shared items and agreed policies for a range of circumstances. A legal advisor can help formalise this and act as arbiter, should a dispute arise.

It’s also important that you both have a will, testament and life insurance place. Also, to deter disagreements, keep a record of the costs you both incur, from deposits to bills and maintenance costs.

What type of property should we buy?

This will depend on your means and circumstances, although it’s a good idea to go for something that will sell quickly, should the need arise. There are no guarantees with property, but generally, the following properties in a desirable area sell well:

  • Flats
  • Homes with separate bedrooms and bathrooms
  • Homes with a large living area
  • Homes in good condition that don’t require significant renovation or repair

How to buy a house with a friend

Before you start looking for properties for sale, first make sure you and your friend are on the same page – both financially and in terms of what type of house you want. It could work out well for you both, but it could also put your friendship and finances on the line. Weigh up the pros and cons before making your decision.

Have you lived together before? Being flatmates first is often a good test to see if you gel as co-inhabitants. To begin, renting a home may be your smartest way forward.

Once you’ve decided to buy together, get your financial documents together and prepare for the next buying steps.

Our two cents

If you’ve decided that buying a house with a friend is the right route for you, be sure you’re clear on long-term aspirations and wholly agree with the choice of property. Document everything and put a legally binding agreement in place.

Once you’re ready to kick off the house hunt, start your property search on Boomin to get ahead of other home buyers.

Faye deGavre

Content Writer