Friends Reunited - our guide to buying property with a friend

Buying a property with a friend or a family member with the purpose of investing together, you should always make sure you have the appropriate agreements in place in advance.

1. Seek expert legal advice

If you are buying a property with a friend, ensure you both have formal agreements in place from the outset. Such a co-habitation agreement should take into account all eventualities where personal circumstances may change. For example, what happens if your friend decides to marry or needs to sell the property for any unforeseeable reason.

2. Maintain honesty and transparency in your finances

Discussing financial matters with a friend can be awkward, especially if you have different incomes and personal situations. However, if you are making a serious investment and buying a property together, you need to be prepared to be upfront and honest about every aspect of your finances. You need to also be aware that when you link together with a friend on a mortgage, you are also linking your credit profiles.

3. Shop around for the best mortgage

Often friends buy together to get on the property ladder and situations are likely to change in the future. Therefore it doesn’t make sense to choose a long term fixed rate product which will not give you the flexibility you need if your situation changes in the short to mid-term future.  More and more lenders are offering joint mortgages designed specifically for co-owners. Always seek advice from an independent mortgage broker. McQueen Legal work with an independent financial adviser who can offer expert advice in these situations and advise on the best options available to you.

4. Set up a joint account

Having a joint account from which mortgage payment can be drawn, as well as for bills and mutual expenses, takes the responsibility away from just one person and therefore minimises the possibility of any disputes.

5. Draw up an inventory for shared items

Drawing up an inventory for both individually owned possessions and shared items in your formal legal agreement will help minimise any possible conflict if one party decides to move out for whatever reason.

One question that we are often asked is, “what if we are buying in unequal shares?”. It is very common for one party to have saved more for a deposit, whether this is savings from a previous house sale or inherited funds. In this case, we would strongly advise that this is documented in the formal agreement and agreement is made how the sale proceeds will be split when it comes to the time to sell the property.


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