House prices are extreme considering an average person’s income in the United Kingdom. Moreover, most people resort to getting a huge mortgage to pay for their new home. Although this the norm, considering a joint investment with a friend to buy a home can be an alternative to being chased by mortgage arrears. Buying a house with a friend can be stressful if you do not consider all aspects of co-owing a house.
Sharing investment, mortgages and profits
As friends, you will have to agree on exactly how much investment you are placing for the buy, also how to split the profits and proceeds if you decide to leave the agreement. Mortgage payments should also be divided accordingly. As good as your relationship with the friend is, it is always a probability that it will not last forever. So consulting a solicitor to draw up a declaration of trust with the agreements is recommended.
If the friends share equal investment to buying a house, it is much easier to calculate the subsequent payments on expense and mortgage. However, when one of the friends has more investment, the payments and shares will have to be split accordingly, complicating the process.
The joint mortgage is designed for co-owners of the property. Everyone has different circumstances and should consider taking financial advice to go through with the mortgage. Considering income, the expense of co-owners should help decide on the amount of mortgage you can take for the house. Shared payments of mortgage should also be agreed upon to make sure they do not escalate to big arguments in the future.
Registering indifferent shares at the Land Registry
If friends invest the different amount to the purchase of property, it is possible to record unequal shares at the Land Registry. This will require some calculation and may be a solicitors help. Moreover, this will contribute to claim the share if any one of the friends decides to move. Solicitors will take care of this aspects during the conveyancing process.
As the house is jointly owned, it is recommended to maintain records of payments you incur for maintenance, expenses and also income if you decide to rent it out. The records will show proof of expenses if any disagreements arise between the friends. It will help keep track of shares you agreed upon before buying a house.
Keeping things simple
As joint ownership, finance is the most important aspect you have to consider. Starting a joint bank account to pay the mortgage or shared expense is recommended. Using banks help you track payments easier. It is also recommended to record and list out things you own and share.
Making sure you have a mutual understanding with the friend is the most important aspect if you want to benefit from buying a house with a friend. Setting up rules you both agree on important issues for using the property should be a priority.
Buying a house with a friend does have benefits like a less financial burden and shared expenses. However, it should be taken into consideration with many aspects including mutual agreements and legal documents to save your investment.