SHARE AND SHARE ALIKE
THE INS AND OUTS OF A GROUP MORTGAGE
Sharing property costs with friends has become a popular option, pushed by rising rents which can make ownership a cheaper choice.
M&S Bank calculates three out of five 18-35s would consider a group mortgage – against one in four over 35s.
Many can afford monthly repayments – sometimes less than rent. But saving up for a deposit is tough with getting that cash sum seeming like a never ending treadmill.
The most popular way of getting the down payment is getting together with partners, friends or work colleagues, preferably with similar ages and tastes.
If you can’t find a suitable home partner, there are websites putting home purchase sharers together including shareamortgage.com and propertybuyersmatch.co.uk. Think dating site meets mortgage finder.
But mortgage expert Ray Boulger, at online broker Charcol, warns against sharing with complete strangers. “It’s madness,” he says. “You should get to know each other by renting together for at least six months. Mortgages are very expensive to get out of.”
Many lenders, including Barclays, Woolwich, Lloyds and NatWest as well as M&S, allow up to four friends to share a loan. The proportion each owns can depend on how much an individual can afford, although equality is the best plan. Having a dominant sharer rarely works for long.
Often a one bedroom flat is only a little cheaper than something with two bedrooms – with four sharers, the property is more affordable.
Many prefer sharing to staying alone in a tiny flat or bedsit. Benefits to living with others include having company, dividing tasks and costs, having someone to listen to your woes, and even someone to watch a box set and divide a giant pizza with.
You have to do your homework, however. Besides compatibility and jumping mortgage hurdles, ensure the property has enough space for each person (or couple) to maintain some privacy – wafer thin walls are no help. Not everything will be smooth.
And plan ahead. One or more of the sharers will move away eventually. The easiest solutions are renting the spare space, bringing in new sharers, or a pre-arranged scheme to purchase an unwanted slice of the property.