With such a gap between property prices and income it is highly likely that most people will end up buying their first home with someone else – whether it is a partner, friend, parent or sibling. Two incomes and two deposits will mean your money goes a lot further.
However, there are issues to bear in mind when buying property with somebody else. In terms of the mortgage itself, all the typical issues around affordability and meeting the lender’s stress testing still apply. Lenders will look in great detail at each applicant’s income and expenditure, especially fixed outgoings such as personal loans and credit cards. It makes sense for those buying to ensure their finances are in good order before making a mortgage application.
The other issue is that with a joint mortgage the liability for each borrower is joint and several. This means that the lender can pursue each applicant individually and jointly if the mortgage falls into default so if your buying partner doesn’t pay their bit, you are also responsible for it. This element, combined with the affordability issues, means that if a couple split up or a friend wants to go their own way, the lender will need convincing that the remaining borrower can afford the mortgage before the other party is relieved of their obligation. There will also be considerations of buying the other party out and the potential need to release equity to do this. There are plenty of potential pitfalls so applicants need to consider these before committing and seek independent mortgage advice.