Many who cannot afford to buy a house for the first time are banding together with friends or their partner to increase their possibilities. However, take a good, long time to consider the benefits and disadvantages of such an approach.
The strict policies in lending, the high prices on property, and the huge deposits required make it a feat of super-human strength to buy anything at all, especially without the support of family.
Right Move, real estate agents, there is an increase in people purchasing together with a friend or partner. Solo buyers has dropped off from more then 32% at the end of 2009 to just over 25% at the beginning of 2011. The number of people banding together to buy a home has increased to over 72% from 62% in the same time.
Right Move’s spokesperson commented, “The economic slump and stringency of mortgage lending has created an atmosphere where buying by one’s self has become impossible. Lenders seem unwilling to compensate for the situation, but buyers are adjusting in creative ways. They are joining together to gain that trophy of owning a home.”
In order to work it out with another in buying a home you will both have to be absolutely honest about your finances, since each of your credit histories will affect your joint possibility at securing a loan. Bad credit due to not paying bills on time can cause your application together to be rejected by a lender.
You will have to also determine how much of a down payment you can make together and then the amount you will need to borrow.
Your deposit should amount to around 25% of the value on the property and the loan you will be able to secure will be roughly 300% of your joint earnings. The lower the deposit, the worse the rate you will secure.