Considerations for Buying with a Friend
Today’s high property prices mean that many single people are left unable to afford to buy their own homes. One way that single people can more easily manage the purchase price of a house or apartment is to team up and buy with a friend. Unfortunately, buying property together can be a clear case of mixing business with pleasure and the stress of purchasing and owning a home together can sink some floundering friendships. Before you decide to double up and buy with a friend, consider the following aspects of changing your relationship.
Friendly EconomicsPurchasing a home with a friend means more than just combining your savings to come up with a deposit. On the plus side, it usually also means lower mortgage payments for each individual but a larger mortgage overall. Ideally you’ll want to set up a formal contract that discusses the percent or proportionate amount of each individual’s stake in the property, how the costs of the mortgage, upkeep and maintenance will be divided, when utilities and mortgage payments will be due and what will happen if one individual is unable to cover his or her bills. These are all common areas in which friends run into problems when they become joint homeowners, so working these issues out beforehand should help you avoid rows later on.
Background ChecksIt might seem a little over the top to run a background check on a friend, but if you are purchasing property together you are leaving the realm of friendship and becoming partners. This means it is in both of your best interests to know as much as possible about the other. Financial and credit background checks will help put both of you at ease that the other has no hidden skeletons in his or her closet, and references from past landlords or flatmates will help you each rest assured that living together should not be a problem. However, it is always advisable to live together for at least a short while before purchasing a home together so that you each know exactly what you are getting into.
Formalising RelationshipsFriends generally need to formalise their relationships when they want to become joint owners of a property and this means that formal deeds and agreements are necessary. Though this means additional legal costs at the outset, these documents often prove invaluable down the line given that their terms often head off disputes between the owners. Even if you can’t imagine getting into a fight with a friend now, remember that changing your relationship to that of joint owners means that new circumstances will arise and being prepared for them is key to a successful future relationship.
Exit StrategiesProbably the last thing you want to think about when buying a home is how you’ll eventually sell it, but deciding on how to end a joint ownership is important from the outset. Discuss the options with your friend and solicitor and consider formalising any terms that you agree upon. Remember, written documents are in both of your best interests so if you and your friend are happy with a particular method of sale then writing it down is your best bet.
Buying a home with a friend comes with many considerations. Discuss common options with a solicitor and proceed with care. You only get to buy your first home once, after all, and you won’t want to sacrifice a friendship to do so.