Group Mortgages

Buying your first home is not just a daunting experience but for many an impossibility. House prices continually grow at a faster pace than wages and this has been the case for many years.

Parents gifting big deposits so that their children can buy their first property has become more popular in recent years as well as the take up rate of various government backed schemes to get first time buyers on the first rung of the property ladder.

Another way to combat the difficulties of home ownership is the “Group Mortgage”. This is where a mortgage is taken out by a group of people ranging from 2 to 4 people. Each person will put down an equal deposit, share the cost of the house buying fees and they will own an equal share of the property. Affordability will be assessed on each person and everyone will be jointly liable to keep up repayments.

Mortgage Lenders often allow group mortgages but your solicitor will draw up a slightly different agreement what is usually used for sole and joint purchasers called a “declaration of trust”.

The main benefit to owning a property as a group is that everyone has pooled their resources together to buy a property. If in the future house prices increase the group can decide to sell the property and divide any gain in capital between them. This could pave the way for people in the group to purchase a property by themselves.

The downside is that circumstances can change and one person may want to leave the group thus possibly forcing the rest of the group to sell. If this happens then always seek advice from a professional to see what options are available.

The group mortgage is a good way to get on the property ladder and get out of the rent trap. A 3 or 4 bedroom property may be bought for less than 3 or 4 separate one bedroom properties which allows the group to buy as a group whereas it may not be possible as individuals.

Group mortgages are not new but have gained in popularity in recent years as many first time buyers are forced to find alternative ways to buy their first home. The group can involve family members, friends or work colleagues..it is your choice but remember that a group of people living together is not always going to be like an episode of friends.

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