10 Step Guide To Co-Buying
Co-buying really is a simple process, find someone you like that you feel you could live with and buy the home of your dreams together. In a few years time you’ll be ready for your first solo place, so you sell the property, divide the profits and move on up the property ladder.
Of course there are a few practical details you’ll have to consider along the way, so here’s a quick 10 step guide to co-buying:
1) Look around you
Where are you living right now? At home but keen to have some space to call your own? In rented accommodation but sick of wasting your money paying someone else’s mortgage? A student just about to leave education wondering whether you’ll ever be able to afford a pad? Whatever your current living situation you probably CAN afford to change it and buy. Share your way onto the property ladder?
2) Do you already know someone?
If you have a friend or a family member that you can buy with then you’re very lucky and surprisingly rare as until recently the number of people buying in this way has been tiny. Since the creation of the ‘co-buyer network’ (a place where anyone can find others to co-buy with), by SharedSpaces in 2005, a quiet revolution has been building momentum and now thousands of people are putting themselves forward as possible co-buyer partners to find someone they click with to help them step onto the property ladder, buy bigger and better than they could afford alone, or launch into property investment. Not only that, the rest of the property industry is sitting up and taking note with more and more mortgage lenders promoting that they offer mates mortgages where two to four people can buy together at preferential rates.
3) Finding a mortgage mate
So where on Earth do you look for someone to buy a property with? The answer is to go with the biggest and the best in the market. After launching the concept, SharedSpaces.co.uk are still the UK’s leading ‘co-buyer network’. Thousands from all over the country have registered and as it’s totally FREE to have a look around the site it would be an excellent place to start looking for your ideal mortgage mate. The structure is very much like an online dating website where you post a profile telling everyone a little bit about yourself and why you are the best potential co-buyer mortgage mate out there and then you can search the network for others you like the sound of.
Your home may be repossessed if you do not keep up repayments on your mortgage
4) What to look for
This is of course totally up to you, but bear in mind that you’ll be sharing with them for some time so compatibility is really important. Two main things to consider here are personality and property aspirations. You’ll want to find someone you can get along with, have fun with and can resolve any differences you might have quickly and amicably along the way. It is however equally important that you both have the same goals for the property and living together. Do you want a new home or one with character; are you looking to move into a place that needs some TLC or one that’s like a show house; how long are you looking to live there for; or are you just an easy going kinda person who’s more interested in the person than where you live? Sorting out your property aspiration compatibility early on will save you much wasted time if you’re just not going to find some middle ground you can both agree on.
5) Playing the odd’s game
Contact as many people as you can to find your ideal co-buyer. It would be wonderful if people were predictable, but they’re not, and what you might be looking for in someone could change on a regular basis until you get the right feeling about someone. You may be lucky and find the perfect person straight away or you may need to meet with quite a few before you find your perfect match, but there is absolutely nothing wrong in playing the odd’s game and keeping your options open.
6) First contact
You’ve seen the perfect profile, emailed them and they sound great, what now? Once you are happy to do so you can exchange phone numbers and have a quick chat, then meet up over a coffee or a snack to get to know one another better. If it sounds a little like dating, well it is, and you should employ similar sensible precautions when meeting someone for the first time as well. Take a friend along and meet them in a sociable place, after all you’ll want to meet their friends if they’re going to be in your home from time to time, you’ll want a second opinion from your mate, and you’ll want to see what they are like in a social situation. Keep the first meeting light and friendly and if you get along arrange to meet up again.
7) Co-buyer confidence
When you’ve found someone that you feel has the potential to be your perfect property pal there are a couple of things that you should do, and a couple that you could do to build both your confidence that you are an ideal match.
Should do’s
Take your time: There is no rush, and you should never consider there is. Making the right decision is paramount to the success of any co-buyer relationship. Take as much time as you need to get to know your potential mortgage mate. Meet their friends, meet their family, go for a drink, go window shopping together, whatever it takes for you to feel that they are no longer a stranger, but a new friend or a business partner in the co-buyer process.
Could do’s
Credit search: You cannot do a search on someone else, but if you all agree to get your own and swap them with one another it could provide everyone with added confidence that you are an open and genuine co-buyer group. Credit checks can be done for free through Experian and basically show whether you have any outstanding debts or issues that could make getting a mortgage more difficult. By the way, do not worry if you do have issues on your credit report, companies like Experian are experts at assessing whether outdated issues should be removed, and being up front about your past proves your honesty which can only been seen as a positive in the eyes of someone you’re hoping to share with.
Police check: Once again you cannot get one on someone else, but for a few pounds you can get a report sent to you from the national police database which shows if you’ve ever been convicted of a crime. It’s not something you should demand of your co-buyers, but if you all think it’s a good idea it’s a quick and inexpensive process that could add a little extra confidence that the people you’re thinking of sharing your home with are who they say they are.
Try before you buy: Some people are happy to go with their gut, but others need far more reassurance. If you have found out all you can about a potential mortgage mate, have met their friends, have been out on countless evenings with them, seen where they live and still you are not 100% sure, you could always ‘try before you buy’. Why not flat-share with them for a short period because it’s a great way of cementing a friendship or being sure they are not for you.
8) The money side
How much can you borrow on your own and how much can you borrow with the help of your mortgage mate(s). There are so many ways of structuring a mortgage these days that it is essential you contact a professional to work out which is the best deal for you. One great thing is that lenders are backing the co-buying concept by offering great multiples on several people buying together, and some even have specific products for co-buyers. Speak to your mortgage broker as soon as you can to find out exactly what situation you are in, and when you find someone to buy with both of you should meet with your broker so you know how much your combined budget is. Don’t just guess or you could waste weeks looking at property way over or even under your budget.
9) Non scary legals
Now don’t run away at the thought of anything ‘legal’ this really is very simple, but so important. Co-buying is a big financial commitment so it is essential that you set out the right legal relationship with anyone you are considering buying with. You’re beginning to get nervous I can tell, but there is nothing scary about this bit and a good solicitor can walk you through this process for very little money. You’d all sit down with a solicitor and together create/adapt a document called a ‘Deed of Trust’ which sets out each co-buyer’s rights and responsibilities, how all the major costs are to be split, and ultimately how the relationship will end when you decide to sell. This not only protects your rights, but the creation of this document requires you to think about and discuss the co-buyer relationship from start to finish so it helps to set a clear path to follow and ensure that everyone’s happy with it.
10) Congratulations it’s a new home
Now you’ve found your ideal mortgage mate and set out your legal relationship in writing, you know how much you can borrow together, and boy is it a lot more than you had to start off with, so now it’s time to go and spend that money and find a home. The standard way to do this is to register with estate agents, search through your favourite property portal or your local newspaper.
If you would like mortgage advice on co-buying with up to 4 people be it friends or strangers, please complete are mortgage advice form for co buying mortgage advice With any joint mortgage its also advisable to take advise on your options for a joint life insurance to protect your financial stability should the unthinkable happen and one of the parties to the mortgage dies during the mortgage term.
