Moneyfacts.co.uk warns of the dangers of buying with friends

With interest rates predicted to rise further, and house prices still increasing, first time buyers may look at buying a home with friends as an alternative and affordable way to get themselves onto the property ladder.

However, Julia Harris, mortgage analyst at Moneyfacts.co.uk explained: “One relatively new option for first time buyers which has not been explored so deeply is the possibility of buying with a group of friends. Moneyfacts.co.uk research has shown that over 60 mortgage lenders will accept an application from up to four individuals.”

She continued: “But with 70% of such lenders still only taking the highest two salaries into consideration, getting a big enough mortgage still remains a problem. So while the monthly repayments will be more affordable due to being spread between all applicants, the property itself may still remain out of reach.”

Harris added that many mortgages are not really designed for sharing among friends. She said: “Despite mortgages with as tie-ins as short as six months being available, the most competitive fixed or discounted rates will be for a minimum term of two years. On the face of it two years may not seem very long, but it could seem like an eternity if your fellow co-owners turn out to be housemates from hell.”