Co-Buying Mortgages in UK

Want to live together and get on the property ladder? - then Co-Buying may be an option.

Co-Buying is when individuals legally group together and buy a property between 2, 3, 4 or more people known as 'Co-Buyers'. Simple as that! Well it is simple as long as you are happy living with the other co-owners. So it may be worth renting together to see if you can live together first. Even if you are best friends the other’s habits can be unbearable day in day out. On the other hand buying a house can be stressful! So it helps if you can share the workload with your other co-buyers.


Financial benefits are the main reasons to Co-Buy:
it can increase your financial muscle by buying together for example by increasing the deposit. Big lenders like Yorkshire Building Society, HSBC and Northern Rock take account of at least the two highest incomes. The costs and repayments are split between 2 or more Co-Buyers. Many people have always lived in a busy house and simply don't want to live alone, if they can't afford to buy on their own co-buying gives them another option.

Tips for Co Buying Mortgages

1. Draw up a legal contract.
2. Spell out how the property will be divided when you sell
3. Insure each contributor to the mortgage for ill health or critical illness
4. Exit strategies need to be agreed for all eventualities and set valuation methods for break –up if one busy out another owner is the price the average of 3 estate agents valuations
5. Own the business as Tenants in Common so each person owns their share outright.
6. Check co-buyers can pay as you are each ‘jointly and severally’ responsible.
7. Consider having your own solicitor


See also: Joint Mortgages advantages and disadvantages

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2 Comments:

Anonymous Richard Cohn said...

The rise in acceptance of co-buying is astounding since we launched the concept of the "Co-Buyer Network" in 2005 with SharedSpaces.co.uk, but there are some facts that your reads should be aware of:

Firstly never enter into a co-buyer relationship lightly. Buying a property with someone else is an expensive and long term relationship. If you don't know the person all that well you should take the time to get to know them. You should take as long as it takes until they are either a friend or a business partner in the co-buying experience with you. Never buy with someone you'd consider a stranger.

Secondly, the legal document that you've mentioned the "Deed of Trust" is as much about making all co-buyers think very hard about the entire life cycle of the buying/owning relationship as well as securing their legal rights over the property and dividing up the ownership percentages. The creation of this document is supposed to make each party think about what they are looking to gain from the relationship, what could be potential issues in the future, and when they decide to part ways by selling the property how they will go about this.

The final of the three most important things to consider when co-buying is MPPI, Mortgage Payment Protection Insurance. If you find someone financially and mentally stable to buy with but 6 months down the line they loose their jobs what do you do? Well the mortgage company is still going to want ALL their money monthly, and without MPPI this could spell trouble. With MPPI you should be covered if one of you is ill and unable to work or looses their job, the insurance policy could kick in and cover the shortfall. It is of course essential that you check what each MPPI policy does cover before you take it out.

I hope this has been useful.

Richard Cohn
Founding Director
SharedSpaces.co.uk
"Together We Can Do Anything"

March 6, 2007 at 2:47 AM  
Anonymous Richard Cohn said...

The rise in acceptance of co-buying is astounding since we launched the concept of the "Co-Buyer Network" in 2005 with SharedSpaces.co.uk, but there are some facts that your reads should be aware of:

Firstly never enter into a co-buyer relationship lightly. Buying a property with someone else is an expensive and long term relationship. If you don't know the person all that well you should take the time to get to know them. You should take as long as it takes until they are either a friend or a business partner in the co-buying experience with you. Never buy with someone you'd consider a stranger.

Secondly, the legal document that you've mentioned the "Deed of Trust" is as much about making all co-buyers think very hard about the entire life cycle of the buying/owning relationship as well as securing their legal rights over the property and dividing up the ownership percentages. The creation of this document is supposed to make each party think about what they are looking to gain from the relationship, what could be potential issues in the future, and when they decide to part ways by selling the property how they will go about this.

The final of the three most important things to consider when co-buying is MPPI, Mortgage Payment Protection Insurance. If you find someone financially and mentally stable to buy with but 6 months down the line they loose their jobs what do you do? Well the mortgage company is still going to want ALL their money monthly, and without MPPI this could spell trouble. With MPPI you should be covered if one of you is ill and unable to work or looses their job, the insurance policy could kick in and cover the shortfall. It is of course essential that you check what each MPPI policy does cover before you take it out.

I hope this has been useful.

Richard Cohn
Founding Director
SharedSpaces.co.uk
"Together We Can Do Anything"

March 6, 2007 at 2:48 AM  

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