Q. I have been dying to buy my first property but am really struggling financially to make it happen. However a friend of mine has suggested that we join forces and buy something together, at least that way we get on the ladder. Do you think this is a good idea and how can I protect myself from a legal standpoint?
A. I absolutely take my hat off to anyone who is brave enough to join forces with a trustworthy friend or family member in order to achieve their dream of buying their first property. This is a really great solution if you are unable to do this as an individual at this moment in time. Increasing numbers of first-time buyers are boosting their purchasing power by clubbing together with a friend – but make sure you think carefully about the pros and cons first. If you are going into a mortgage jointly, make sure you are both aware of your rights and obligations first – and what you will do if one of you wants out. Buying a property with someone else is a huge commitment that should never be entered into unless you are completely confident that you can trust the person you are buying with. If one party doesn’t pay their share of the mortgage, or any other bills held in joint names, it is both applicants that will be chased for the debt. That means if one of you stops or is unable to pay their share of the mortgage, the other will somehow still have to keep up the payments or risk losing their home. Once you have worked out how much you can afford to spend on a property, you will then need to think about how you will own the property legally. If you own your property as joint tenants, this means that it belongs to you and the other owner jointly. You can’t re-mortgage or sell the property without the agreement of the other owner. If you own your property as tenants in common, however, it still means that it belongs to you and the other owner jointly, but also that you own a specific share of its value. You can give away, sell or mortgage your share, so most people buying together as friends opt for this route. It’s essential to discuss what you will do if one of you wants out of the property. If one of you wants out then the remaining person will effectively have to buy you out. That means they’ll need to buy out the equity stake of the person who is leaving and will also have to show the lender that they can afford to take on the mortgage on their own. If this isn’t going to be feasible, then your only option is for your friend or partner to sell their share to someone else, or for you to both agree to sell the property and split any proceeds. You should also consider what would happen if one of you dies. A will ensures that your property passes to the people whom you wish to benefit on your death, so make sure you write one as soon as possible to prevent your property from going to the state.