loan search for homeowners

Most people are used to sharing accommodation as students, trainees or renters, therefore the idea of living in jointly owned property is the next logical step.

More young people are clubbing together - with siblings, friends and even like-minded strangers - to boost their purchasing power with one in five first-time buyers who have taken out mortgages doing so with someone other than a spouse.

The maximum number of names on a mortgage deed is legally limited to four. But, in any case, lenders take a dim view. 

Lenders will take the best of two incomes and multiply that by three or four times. The third income will only be multiplied once.

Legally there are two types of joint ownership. You can either own the property as ‘joint tenants’ or as ‘tenants in common’. What ownership type you opt for depends on your particular circumstances and reasons for buying.

Under the ‘joint tenancy’ agreement the joint owners together own the whole property and do not have a particular share in it. If one of the owners dies, the other will automatically become the sole owner. This would apply even if a will had been made leaving the deceased owner's ‘share’ to someone other than the co-owner.

A quarter of the link-ups do not pay off, with borrowers splitting up or falling out, leaving at least one party out of pocket.

In cases where the arrangement went sour, one in ten will walk away with nothing while one in six will receive only their share of the property's original value. More than 40 per cent of borrowers whose mortgages end have not signed an agreement about what would happen if the deal collapsed.

Property prices have climbed so high that finding a property co-buyer has become a logical next step. However, buyers should protect themselves and their investment by drawing up a cohabitation agreement, which sets out the respective shares of the property and mortgage or remortgage.

Before entering into any property or financial agreement it is a good idea to seek advice from a solicitor, especially if you have not known your property partner for long.

Mortgage payment protection insurance will cover one or more of you in the event you are not able to pay your part of the loan if you are ill or made redundant.

If you buy property with friends, a solicitor can draw up a 'tenancy in common' agreement so each person owns a definite share in the property.

While there are many issues to consider before entering upon an agreement, the benefits of owning a home, solely or with friends can be financially rewarding, especially in the rising property market today.

Luckily, as joint ownership is a developing trend, more and more mortgage and remortgage lenders are offering mortgages designed specifically with joint owners in mind which makes joining the property market not such a distant dream, but it is still very important to have the legal work sorted out before you sign any mortgage.

The author is Melinda Varley who an experienced journalist currently specializing in articles for the financial field. Melinda has held several positions for magazines and newspapers both hard copy and online and both in the UK and Australia which is where she originates from.

This article does not represent ‘financial advice’ as each person's individual requirements will be unique to their needs. If there is something in the article which you wish to rely on then please check those details with the person with whom you arrange a secured loan, remortgage or any other financial service.

The views in this article represent those of the author and not those of Netbasic Limited.