21 Feb 2022
A Guide to Buying a Property with Someone Else
With property values ever on the rise, it can be tough or downright impossible to afford to buy a property on your own. So, you might think of other ways to afford a decent place. Whether you’re in a couple and ready to take that next step or you’re thinking of sharing a place with friends or family, here’s what you need to know about buying a property with someone else.
You Might Not Have to Live with Someone Else
Before we get started talking about house shares and moving in together, there are actually ways you might be able to buy a house with someone else but not live with them. There are a couple of ways to do this, but not everyone will be able.
Get a Guarantor Mortgage
This option won’t be available to everyone, but you can get a guarantor mortgage. A guarantor will be a third party who will agree to meet the monthly mortgage repayment amounts on your behalf, if for some reason you won’t be able to, due to a change of circumstances, etc.
This third party will usually be a parent, guardian, or other family member, but you might have to be lucky to have a relative that is willing and able to enter this agreement and cover the costs for you.
At the very least, it’s an option worth exploring if you have a close relationship with someone who has the funds to help you out when you really need it.
If you’re struggling getting a place on your own, as part of the guarantor mortgage you could have them contribute towards a portion of your monthly repayments and give you the boost you need.
This is similar to what can happen with a joint mortgage…
Joint Mortgages
A joint mortgage refers to when a mortgage is taken out equally by two or more (up to four) people. You could enter into a joint mortgage with a partner or spouse, or a number of friends or family members.
A joint mortgage can also work similarly to a guarantor mortgage, where a parent or other family member can enter into a mortgage with their child, grandchild, niece/nephew, etc., to help get onto the property ladder.
Some things to note with a joint mortgage; if one person passes away, the ownership of the mortgage automatically reverts to the surviving person. You cannot pass your “share” of the joint mortgage on to someone else in your will.
Tenants in Common
Tenants in common is a way to live with someone else but own different shares of the property. You might earn more than your friend or vice versa so can pay different amounts in relation to those earnings.
Unlike a joint mortgage, your share of the property doesn’t automatically go to the other owner(s) if you die, and you can instead leave your share of the property in your will.
Ownership and Changing It
You can change from tenants in common to joint tenants, this may happen if you get married and want to share equal rights to the whole property.
The opposite can also happen, so if you get divorced or separate for example, you can change from joint tenants to tenants in common and be able to leave your share of the property to someone else.
It’s important to note that unless you have both/all names on the deeds, then difficulties could arrive further down the line.
Say for example, the mortgage is only in one person’s name, but a partner moves in and starts paying half the monthly repayments. If they then split up, the partner that moved in wouldn’t be entitled to anything unless an agreement was made. So, it’s best to talk about and establish these things as soon as you can to protect yourself from any future disappointment.
Advice For Buying a Property with Someone Else
As would be the same for any type of mortgage, it’s best to talk to a mortgage adviser for professional advice. Our online mortgage advisors are here to help. Just let them know your details and circumstances and they can get to work finding a joint mortgage that’s perfect for everyone involved.
Advantages
One of the main advantages of buying a house with a partner or friends is that you can pool all your money and resources together to get a bigger, better property or pay less on a modest property. You can put together your savings to put down a big deposit and then pay even less monthly as you divide it amongst yourselves.
You’ll also have the luxury of sharing resources for common rooms such as furniture, splitting the costs on nicer living room furniture, rather than buying everything separately. It will also be good for affording decorating or repairs, just as long as you can agree on how to decorate.
Paying a mortgage can end up being cheaper than renting and be a great way of saving money for other things. You may decide to buy a place with friends for a few years, then sell up and go your separate ways as each of your lives change (finding partners, etc.). It’s not something that’s particularly common but can be a good financial strategy.
After all, money spent on rent is gone forever, but money towards a mortgage is an investment into owning something outright in the end.
Disadvantages
It’s a big commitment, and you’re legally binded. Buying a property is essentially the millennial version of marriage these days. Due to the high costs of both marriage and buying property, some people are having to choose one or the other.
You’ll also have to make sure you have a good and strong relationship with whoever you move in with, whether it’s a partner, friend, or family member. This is a long-term commitment, so if you have any doubts or are prone to fallouts with your potential housemate(s) then it might not be the best option for you.
Tips and Alternatives
If in doubt, renting may be a better way to test the waters, as it’s not as huge a commitment as buying a house and getting a mortgage with someone.
You can see how you get along (i.e., if they do their fair share of the housework, they’re not messy or loud, and they don’t start to drive you mad) and if you’re a match made in heaven, you can think about taking that bigger step together.
Whilst mortgages can be cheaper than paying rent, with renting a place, you at least have more flexibility. Plus, if something is wrong with the property, it’s usually the landlord’s responsibility to have it fixed - rather than you having to pay for repairs and maintenance on your own property.
Final Thoughts
Whether doing it alone, with a partner, friends, or family, buying a house is a big step, whatever the circumstances. Make sure to think long and hard about your decision to buy with someone else and research your options. As always, if you need professional mortgage advice we are happy to help, so get in touch today.
