Buying a House With a Friend: Advice

For some people, buying a home by themselves might feel out of reach these days, especially for first-time buyers. But what if you could join forces with a friend and turn that dream into reality? By sharing the financial side of buying a house, you could soon find yourself living in your own home, escaping the rental loop, and sharing a new experience with your close friend. 

There are factors to consider, however, before jumping into this big life decision, which is why we’re here to help. This guide will equip you with the knowledge you need to navigate buying a new house with a friend, from handling the initial conversation to settling into your dream home.

Benefits of buying with a friend

There’s no doubt that there are great benefits to co-buying with a friend that you trust. Some of these advantages include:

Bringing finances together 

Sharing the cost of buying a home is one of the most appealing aspects of joining forces with a friend. Where buying a home may seem impossible based on your own wage, having a co-owner means that both wages are taken into account when getting a joint mortgage. If you can take out a larger mortgage, then this opens the door to viewing more properties to find the one. 

Seeing as the two of you can pool your money together, this also means your deposit could be larger than if you bought on your own. A bigger deposit means you could have access to better mortgage deals and reduce your mortgage cost overall. Plus, if you both have Lifetime ISAs you can use them in conjunction towards your house together. This means you can both get the government’s 25% bonus on top of your savings. 

Potential for double the fun

When going to house viewings, you’ll have double the eyes to spot potential issues and double the enthusiasm to find the perfect place. Having a friend to go through the home buying process with can make for exciting adventures as you go on house hunting weekends, shop for decor, and plan your housewarming event. Living with someone you’re close to can make every evening feel like a sleepover, and it also means the household chores are halved.

Drawbacks to consider

Although there are some great benefits of buying together, some things to consider include:

Be honest about finances

As finances are the biggest factor in buying a home, it can also be the area which causes the most disagreements or friction. Before even looking at houses, make sure to set a budget that you can stick to. When you take out a joint mortgage, you must manage your money effectively so that you can both keep up with payments. One way of managing finances is to open up a joint bank account where you can send money for mortgage payments and bills equally.

How much can you rely on your friend?

A lot is at stake when you decide to buy your home with someone else, most of all you need to trust that both parties will uphold their side of the deal. Circumstances change, friendships can be tested, and you may eventually decide it’s time to live elsewhere – it’s at this point where the care and attention you’ve put in before signing an agreement will come into play.

You should have a clear plan outlined for what will happen if you both choose to sell the house, one of you moves out in exchange for someone else, or one of you wants to you solely own the house. There will be a split of equity involved, and it’s crucial to plan out exactly what will happen in each of these scenarios and get that plan in writing for complete transparency and in case of legal proceedings. You should be confident that the friend you choose to live with will continue to make mortgage payments and remain civil even in the hardest of times.

If you’ve never lived with your friend before, you may find they are different to live with than you’d expected. Communication is key so that you know who is picking up which household chores and if either of you has boundaries about things like noise levels or cleanliness. 

Top tips for buying with a friend

Some of our essential top tips for going ahead with buying a house with your friend are:

Get a cohabitation agreement

Even though they might be your closest friend, it’s still important to protect yourself legally in case you decide to go your separate ways. To clearly define how finances are handled, duos living together can get a cohabitation agreement with a lawyer’s help. The agreement will address how you split the costs of the property, mortgage payments, and ongoing expenses. This document is especially important in friend groups where one person is contributing more than the other e.g., splitting costs 60% and 40%.

The cohabitation agreement will also cover what will happen in difficult scenarios such as one person wanting to sell or move out. Having this in writing before it happens means both parties understand the process and so can prevent future disputes.  

Will you be joint tenants or tenants in common?

When you buy a joint property, you’ll need to decide whether you own it as joint tenants or tenants in common. Let’s go into what these mean:

Joint tenants

• Have an equal share of the property.
• If one joint tenant dies, their ownership share automatically passes to the remaining joint tenants.
• All joint tenants are equally responsible for the mortgage, property taxes, and upkeep. 
• The property can only be sold if all joint tenants agree.

Tenants in common

• Each co-owner has a specified percentage of ownership, reflecting their down payment contribution or another agreed-upon split.
• Co-owners can leave their ownership share to anyone they choose in their will.
• Responsibilities can be divided based on ownership percentages or another agreed-upon arrangement.
• Co-owners can sell their share individually, though there might be a “right of first refusal” clause for other co-owners.

Enjoy your shared home

So, is buying a house with a friend the right move for you? If you’re both financially stable, have open communication, and share similar visions for the future, it can be a fantastic way to achieve homeownership.

Ready to start house hunting? Check out our modern new build properties in Shropshire and Staffordshire. For more help and advice with buying a new home, explore our blogs from County Town Homes.