Pros Cons of Joint Ownership
Everyone wants to own their own property; however until you earn enough money, you’ll either spend thousands in rent or get stuck living at home with mum and dad. These seem to be the only perceived options, however you could joint own a property and get on the ladder faster. Most people don’t even think of this option and only ever envisage sharing with a life partner. Times are now definitely changing with Share a Mortgage offering the Uk’s only property buying network for homebuyers looking to joint own properties together.
What is Joint Ownership?
Joint ownership or Co-Buying, means clubbing together with family members, friends or someone you've met through Share a Mortgage, to share the deposit, mortgage payments, legal costs and on-going living costs on a home. When you come to sell the property and move on, so long as prices have risen you'll get a share of the gains in proportion to your share of the property.
Out of reach
With the average house price reaching £250,000 (Jan 2014), having enough deposit to buy a property is out of reach for most people. According to the Daily Mail, it costs 9 times your salary to buy a home and when mortgage lenders only accept 4 to 5 times, this means you won’t be able to buy on your own.
Share a Mortgage
Co-buying is soaring in popularity, with dozens of mortgage lenders offering various Friend Group mortgage deals, allowing you to use the income of up to three friends in order to boost borrowing capacity. Barclays Bank have even marketed this as an option for affordability.
A joint mortgage means you are both/all responsible for mortgage repayments - if any of you is unable to pay their share of the mortgage, the payments still have to be made by the remaining joint owners.
The Joint Owners will all be registered as owners, tenants in common, and the shares of the property stated in a legal document call a Deed of Trust. You should also make sure you have a cohabitation agreement to set out how to lease, what happens to your possessions and other legal points when living together.
The Pros of Joint Ownership
1. Lowers the amount of deposit needed
2. With more deposit you can get a better mortgage interest rate
3. Share the cost of living; council tax, water, electricity
4. You can share the initial costs, including solicitor's fees, stamp duty and land registration
5. You are investing in the future rather than paying rent
6. You may be able to shorten the term of the mortgage, therefore saving interest
7. It may allow you to buy a more desirable property in a more attractive area
8. In many cases, sharing costs can work out cheaper than renting
The Cons of Joint Ownership
1. Mortgages are not to be taken lightly - you'll have to trust your co-buyers completely ( Covered in Shared Ownership Protection)
2. Experts warn groups of friends living together are 'unstable' households because they are more likely to experience conflicts of interest ( Covered in Shared Ownership Protection)
3. One or more of you may wish to sell before the others ( Covered in Shared Ownership Protection)
4. You need legal documents to protect your investment, which means additional costs ( Covered in Shared Ownership Protection)
5. You might need mortgage protection and life assurance ( Covered in Shared Ownership Protection)
6. House prices, as we have discovered, don't always go up
Case Study
Suzee Taylor, 23, recently bought a two-bedroom maisonette on the outskirts of Brighton with her friends Kate and Jack for £165,000. "I figured out it would take me about five years working my butt off to afford the deposit on a one-bed flat," she said.
"Two good friends from uni, who are a couple, were struggling to find somewhere they could afford and the idea just clicked. We were scrupulous about talking every detail through and got everything sorted after numerous meetings with our mortgage adviser and solicitor.
"The planning and buying process was stressful, but we're having a great time and we've invested in our own futures instead of lining a landlord's pocket," she said.
What legal agreement do you need?
When buying with someone else, partner, family, friend, mortgage buddy, it is essential to have the arrangement documented to protect the joint owners. This is a legal document that is drafted by solicitors and should include a Cohabitation Agreement and a Deed of Trust.
Want to club together, but don’t know anyone? Share a Mortgage can help
Share a Mortgage is a community of homebuyers looking to partner up with lime-minded people to buy a property together. Whether you buy as friends, family or with a Mortgage Buddy you met through Share a Mortgage, our Independent Mortgage Advisers will help find you the best Mortgage Interest Rates and then our friendly Conveyancing Solicitors will handle the legal work for you.
You will also be offered Shared Ownership Protection that has a cohabitation agreement and Deed of Trust and also includes Inventory listing for personal possessions, dispute resolution procedure and Exit Help for when you want to leave or sell.
Read other related articles
2. Leaving a shared ownership property
3. Cohabitation Agreement is Essential for Unmarried Couples Divorcees forced to rent
4. Share a Mortgage and save thousands in Rent
