Should I buy a house with friends?

Is buying with friends and family a good idea?

It can certainly be a good idea if you do it properly. There are lots of potential advantages, but there are also pitfalls to be aware of and deal with before you buy. Doing your homework before you go ahead is a must.

What are the advantages and disadvantages of buying with friends?

Advantages:

• Sharing the cost can make getting on the housing ladder more affordable

• You can split mortgage payments, utilities, and other living expenses, which reduces individual financial strain

• Buying together may allow you to afford a larger or better-quality home

• Living with friends can offer companionship and shared experiences, making homeownership more enjoyable

Disadvantages:

• Each person will be responsible for mortgage payments. If one should fail to pay up then you will all be liable to cover the shortfall

• Differences in lifestyle or future plans may lead to tension or disagreements

• If you want to move away you cannot sell the property to release funds unless your partners agree.

How do I guard against these potential problems?

Really this is just about taking sensible precautions. First and foremost, only buy a property with people you know well and who you trust.

Secondly, you must put a legally binding cohabitation agreement in place before you buy, to make sure that your investment is protected. A cohabitation agreement should be drawn up by a qualified solicitor and should cover as a minimum:

• Precisely what share of the property you each own

• How much money each party will put towards a deposit and/or mortgage (these two points are often linked)

• How the property should be valued should one or all of you wish to sell, and who will handle the process

• What happens in the event of the death of one or more partners

• Specific procedures for dealing with disputes and disagreements between you. This part of the agreement should be as detailed as possible, even setting out how specific disputes should be settled

• Who pays for maintenance, and how exactly any costs will be shared

• Whether rooms can be rented out and who gets to select the tenant

It's also very important that each partner has a will and testament in place, as well as life insurance.

Once you've bought, it's a good idea to keep detailed records of all costs you incur, from deposit and mortgage payments to bills and maintenance costs. This will help you to avoid arguments later.

Remember, a financial association with someone on your credit report can have a big impact on your finances.

How do I find a mortgage for this kind of purchase?

It depends on the circumstances of you and your purchase partner - particularly income and credit rating.

Although mortgages that allow joint purchases are common, a bit of searching should give you a number of options to consider and a number of lenders to choose from. If you are not sure what to do, seek independent financial advice.

What kind of property should we buy?

Clearly, a lot depends on your means and your circumstances, however, it's better to go for something that you would be able to sell quickly, should the need arise. That might include:

• Flats

• Homes with separate bedrooms and bathrooms

• Homes with large living and kitchen areas

• Homes that do not require significant renovation or repair

What else should we consider?

There are a number of things you can do to make living together more comfortable and avoid arguments. You might consider:

• Setting up a joint account from which mortgage payments are taken

• Putting together an inventory of home contents, with details on who owns what

• Establishing some house rules dealing with things like noise, friends staying over, pets and smoking