Certus Mortgage Solutions: Come buy with me

WE KNOW THAT FIRST-TIME BUYERS CAN HAVE A TOUGH TIME GETTING ON THE PROPERTY LADDER, BUT THERE ARE A NUMBER OF WAYS TO TAKE THAT FIRST STEP, FROM BUYING WITH FRIENDS OR RELATIVES TO TAKING ADVANTAGE OF THE LATEST GOVERNMENT INITIATIVES

Are you finding it hard to get a foothold on the property ladder? Buying a first home is never easy - getting that first mortgage can be tricky and more first-time buyers are finding that they are not earning enough to qualify for the size of mortgage they need.

If that sounds familiar, don't worry. You do have options. One increasingly popular choice is to pool resources with one or more friends or family members to help boost your spending power.

To buy, or not to buy?

It works like this: lenders typically give joint applicants 2.5 times their combined income, or possibly higher if there are more than two people buying. That amount, plus the deposit you've saved, is the amount you can afford to spend on your new house.

Sounds simple, right? Well, yes and no. Before you start choosing furniture together, don't forget that regardless of how emotionally attached you are to the people you're buying with, buying a house together is first and foremost a business deal. That means that all the arrangements should be formalised by a solicitor. It's the best way of ensuring that everyone understands exactly what is expected of them - and that no matter what happens, you'll still be on speaking terms in ten years!

How it works

Once you have chosen the people you want to live with, you'll need to decide who will own what percentage of the property. The deposit you pay should be based on how much of the property you own and all the details should be included in your legal documents, including who is responsible for paying bills. Circumstances can change, so you should also discuss how long you plan to own the property.

You should also think about what will happen if one party wants to sell, and ensure that the others will have a right to buy this portion. There are two types of legal arrangement: Joint Tenancy Agreements and Tenancy in Common.

Joint Tenancy Agreements

Used when two people are buying.
Everything is split equally, including the mortgage, household costs, liability for the loan and any profit or loss made when you come to sell the property.
The property cannot be sold without the consent of both parties.

Tenancy in Common

Used when more than two people are buying a property.
The terms are defined by the percentage of the property each person owns.
All parties are liable for the loan and if one person defaults, the lender will pursue the others for the full amount.
In the event of arrears, everyone will receive a bad credit rating.
If one person moves out and the others decide to buy their share, they will be liable for stamp duty on the full value of the property, if it's worth more than £120,000.