If you are wanting to buy a home but cannot afford one then purchasing a house with a friend or family member can be an idea. However, there are some pros and cons to consider.
Pros:-
- Able to pool resources such as deposit and share mortgage repayments.
- Able to share bills such as council tax, insurance, utility bills, repair fees and maintenance/renovation costs, it is suggested a bank account be formed to cover the properties outgoings and for each person to deposit agreed funds to cover their share.
- Furniture and other items such as a TV may be already owned by you or your friends/family – it is suggested that an inventory is made of each item so there is no confusion should the person wish to sell the item, or moves out and intends to take it with them.
Cons:-
- You may simply fall out with friends or family, especially if the usage/bills are not evenly shared
- Possible change in circumstances, put simply your family/friends situations may change, for instance, they may lose their job, or be offered one elsewhere. This may mean they need to either sell their share to yourself if you can afford it. Ultimately they may need to liberate their share, this may mean the property may need to be sold.
- Paperwork, there would need to be a formal, legally binding agreement created so that everyone is clear of their liabilities and responsibilities, Lestons may be able to help you with drafting such an agreement.
- Shared responsibility, remember that the lender will expect you to make up any lost mortgage payments.
- Tensions can easily mount over things like laundry, chores, friends staying over, pets and so on, it is suggested that a set of “house rules” be created to address any such issues.
It is strongly suggested that each person take out life and critical illness insurance so that if a disaster happens their side of things are covered.
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