Buying a House with a Friend: Is It Right for You?

With the average house price sitting at £265,497, stepping on the property ladder can be daunting for first-time buyers. In addition to the pile of cash needed for a deposit, the monthly mortgage payments can be a struggle with only one income. So, many young first-timers are getting creative to get the keys to a home of their own, including considering buying with a friend, a joint mortgage in tow. After all, you get to live with your mate, share costs and get on the property ladder – sounds pretty sweet. 

Joint mortgage with a friend 

With house prices up and salaries stagnant, there is an obvious hurdle of affordability for first-time buyers. In addition, many mortgage lenders require at least 10% deposit. Bold times require bold solutions, so it’s no surprise that buying with a friend is getting more popular.  

Joint mortgages have, perhaps unfairly, been reserved for working couples pooling their finances to build a future together. Getting a joint mortgage with a friend is a fairly new concept – though more Millennials and Gen Z are waiting longer to get married, with many choosing to stay child-free. Now more than ever, friends and siblings are teaming up to get their foot on the first rung of homeownership. 

To buy a house with your friend, you can get a joint mortgage – just like you can a partner or family member. A joint mortgage allows multiple people to share the cost of the mortgage, and lenders will look at your credit scores, financial histories, income, and debt to judge what loan you may be able to get.  

Can a group of friends buy a house together? 

That answer squarely relies on your finances. If your finances align, it’s entirely possible. A group of friends or siblings can buy a house together and be known as co-borrowers. Each person will be listed on the mortgage application, and the affordability will be based on your combined income. Most lenders will accept up to four people on a joint mortgage (but talk it through with your advisor). 

Are there benefits to buying a house with a friend? 

Living with your bestie? Catching up over a Sunday morning coffee in the kitchen? Having someone at home to feed Mr Chonk when you’re running late? That’s all before you have someone to split the bills, chores, and mortgage with.

Many people choose to buy with a sibling or friend as it gets them in their own home quicker than buying solo. There are also the added benefits of: 

• Shared deposit 

• Shared initial costs 

• Larger mortgage  

• Shared mortgage payments 

• Shared maintenance and upkeep expenses 

• Formal deed and agreement in place (this is where joint owners draw up a deed that means disputes are more easily solved) 

When you consider that it’s taking first-time home buyers an average of 6 and a half years to save for a mortgage deposit (11 years for London), buying a property with someone you trust can speed up this process.  

Should I buy a house with a friend? 

You want to buy a house with your friend Arthur because he’s a good guy and always picks up the next round at the pub. It seems like a no-brainer. But a joint mortgage is a big commitment – in the eyes of the lender, you’ll both be liable. That means the mortgage company is entitled to go after either one of you for repayment. So, if your friend frequently falls behind on rent currently, you could be looking at covering their mortgage payments if you go in on a joint mortgage. Is your friend good with money? Do they stick to their budget? Have they ever fallen behind on bills? 

Strike up a conversation with your friend early on to see if you’re both committed to the immediate and ongoing expenses of buying a property. 

What happens when one of us wants to move out? 

Things can get tricky when circumstances change. If you or your friend wants to move away, you can’t sell the property to release the funds unless both parties agree. If Arthur doesn’t want to sell, he can buy your share from you. It can be tricky, so work with an expert. 

Can I protect the cash I put in? 

The general consensus is that anyone considering this step should draft a legal agreement that formalises the ownership structure. And that includes protecting everyone’s share of the money.  

• A joint tenant agreement means the property ownership is split evenly. If one owner were to pass away, the whole property would legally belong to the other owner, regardless of any wills.  
   

• Tenants in common (or joint owners in Scotland) specifies how much of the property each party owns. If one owner dies, their share of the house will go to whoever is specified in their will, rather than being passed to the other owner. Having ownership of a specific share of the property typically means it’s easier to work out how much of the equity should go to each party once they decide to sell the house.  
  

No matter how close a friendship you have, it’s well worth drawing up a cohabitation agreement as insurance against possible disputes. Friendships have failed over far less. The agreement will cover the deposits paid by each party, mortgage repayments required, house rules, shared items, and agreed policies for a range of circumstances. Get a legal advisor on board to help sort this.  

It’s also important that you both have a will, testament, and life insurance policy. Keep a record of the costs you both incur, from deposits to bills and maintenance costs, too. 

What type of home should you buy with a friend? 

This will depend on your budget and location, but it’s generally a good idea to go for something that will sell quickly, should the need arise. There are no guarantees with property, but generally, the following homes in a desirable area sell well: 

• Flats 

• Homes with separate bedrooms and bathrooms 

• Homes with a large living area 

• Homes in good condition that don’t require significant renovation or repair 
  

How to buy a house with a friend 

Before you start looking for properties for sale, first make sure you and your friend are on the same page – both financially and in terms of what type of house you want. It could work out well for you both, but it could also put your friendship and finances on the line. Weigh up the pros and cons before making your decision. Have an honest chat (or maybe a couple to capture every concern that arises).  

Have you lived together before? Being flatmates first is often a good test to see if you gel as co-inhabitants. If they’re messy or loud or aren’t fair with bills, you’ll be glad you tested the water before committing to a mortgage.  

And, if you’ve decided to buy together, get your financial documents together and prepare for the next buying steps. 

Buying with a friend

Buying a home is a big decision – whoever you choose to buy it with. It’s likely the biggest purchase of your life, so we always advise thinking it through. Whether it’s with your sibling, life-long friend, current roommate, or soulmate, make sure you go into the transaction prepared. 

If you’ve decided that buying a house with a friend is the right route for you, be sure you’re clear on the same long-term goals and agree with the choice of property. Document everything and put a legally binding agreement in place – if things ever turn sour, you’ll be grateful you did this step. 

And, once you’re ready to kick off the house hunt, start your property search on Purplebricks. Book viewings online, 24/7 and receive instant confirmation.