25 Jun Buying a house with a friend
For today’s first time buyer the prospect of buying a home can seem a dim and distant dream. There are
the new mortgage rules, for a start, making it tougher to get a mortgage. In addition, rising house prices and the likelihood that interest rates will follow, can add up to a daunting prospect.
One solution to the problem is to buy a house with a friend. And it’s a great idea. You both stump up the deposit; you both take on the burden of a mortgage; and you share the bills and maintenance. It’s not unlike a house-share, except that you’ve both got a vested interest in looking after the place.
Like most things though, you need to enter into it with some careful thought and planning. For example, you must:
Discuss the difficult questions
Before you go buy a house with a friend. What will happen if one of you wants to sell their share in the future? What if one of you wants to move out but not sell their share? What if one of you loses their job? Both of you are liable for the mortgage, regardless of which one of you can no longer afford it. All of these difficult questions, and how to overcome them, can be put down in writing. Which is why you should also..
…Get it legal
It doesn’t matter if you’ve been best friends since you were two and trust each other implicitly, you absolutely must get your agreement in writing. Ask a solicitor to draw up a Deed of Trust. This is a legal agreement between the two of you that states how much you each contributed to the deposit and your ownership share of the house (because it might not be 50/50 if one of you has paid more). It also tackles those difficult questions and how to resolve them. While you’re there, draw up a will. And put some life insurance in place that will pay your share of the mortgage should you die.
Get a bank account
It is well worth getting a joint bank account for all matters relating to the property. You can keep track of expenditure this way, and agree on a monthly transfer that covers not just the mortgage payments but maintenance costs, bills and so on.
If you’ve ever rented with friends you’ll know what kind of bugbears come up. Get some house rules in place. This might be a no noise after rule, a limit on the number of sleepovers for a boy/girlfriend. (By the way, these rules can also go into the Deed of Trust.) Draw up a rota of chores. They seem like small issues, but it’s usually the small stuff that causes simmering tensions. If you’ve thought it through beforehand, you both know exactly where you stand.
Draw up an inventory
Just as you would if you were a tenant, do an inventory and keep it updated on shared versus non-shared items. Avoid paying for furniture or white goods together, though. Two years down the line it will be difficult to work out how much each is worth if one of you wants to leave.
Need more advice before you make the leap into buying with a friend?
Contact us for expert advice on buying a home with a friend in Chalfont St Peter, Chalfont St Giles, Gerrards Cross, Rickmansworth and Beaconsfield. Call us on 01494 873663.