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I bought a £358k two-bed house with my friend – here’s why it was a great decision, and the pitfalls to avoid
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LAUREN Dore was starting to think she would never own a property - but she managed to get a foot on the ladder by pairing up with a pal.
The 33-year-old "couldn't see a way" she would be able to afford the deposit required to set down roots in London as a singleton.
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She went travelling at 25, and by the time she came back, four friends had either got engaged or were having children and owned their own homes, which sparked her urge to start building up a pot for a deposit.
But it didn't take long to figure out saving up enough to buy would be a very tough task.
"I realised by about 28 that it would be difficult for me to buy anywhere in the area that I grew up in West London and live comfortably and go out," said the imports team lead at an American Food Manufacturer.
She lived with her parents during coronavirus as she built up her savings and still didn't have enough stashed away to buy on her own.
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But after chatting with her friend, Sian Lucas, 33, they realised they could pool her savings together to buy a property.
They're now the owners of a two-bedroom house in Uxbridge, West London, close to family and friends.
It's also a 20-minute walk to the nearest London Underground station and the M40 and M4 are on their doorstep.
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The terraced property cost them £368,000 when they bought it in February 2021.
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They laid down a 10% deposit, splitting it 50/50 meaning they both contributed £18,000.
They also now pay £900 each into the mortgage each month which costs £1,800 overall.
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It's not a forever home though and the duo are planning to sell up by next February, before their current two-year fixed-rate mortgage ends.
Lauren said: "I'm keen to move in with my boyfriend, but it’s given us the leg up we both needed to secure our futures."
She added it was a major relief to be able to buy her first home and have her earnings go towards a mortgage rather than rent.
"It was nice to be able to get onto the property ladder, similar to a lot of other friends.
"It took the financial pressure off, and we felt quite proud that we managed to do it of course."
It turns out Lauren is not alone in opting to buy with a friend to get on the property ladder.
Research from Lloyds Banking Group this month also found 51% of young first-time buyers are willing to consider "non-traditional" routes like buying with a friend or sibling.
And recent research by Equifax revealed 17% of those it polled have or plan to take out a mortgage with someone other than their partner.
The Credit Reference Agency also found almost one in 10 people have already applied for a home loan with a friend.
Chris Sykes, from Independent Mortgage Broker and Advisers Private Finance, told The Sun he had seen more people getting mortgages with people other than their partners.
"Families are buying together, for example siblings buying together or even in some circumstances children buying with parents to help get the parents on the ladder or to get them a more suitable home for the long term," he said.
"I have seen several friends buy together too."
Craig Tebbutt, chief strategy and innovation officer at Equifax, added: “The affordability landscape in the UK has shifted, average income to house price ratios have widened, and consumers are increasingly thinking outside the box about how they use credit to achieve their goals.
"Spouses have long been our ‘go-to’ credit partners, particularly for larger loans like a mortgage, but this won’t be an option for everyone and responsible borrowing alongside wider family and friends unlocks more options to boost financial inclusion."
Pros and cons of buying a home with a friend
It's becoming more popular - but what are the pros and cons of hopping on the property ladder with someone other than a partner?
One major advantage, Mr Sykes said, is that it lets you get on the property ladder in the first place.
"Buying a property with two incomes will have a significant benefit on borrowing levels available and could be the difference between being able to buy at all for someone," he said.
"Or, for example, the difference between a studio flat purchase and a three-bedroom house purchase you may be able to get a lodger into the third room for, and this help towards costs."
One disadvantage, which is of course dependent on the relationship you have with a friend, is that buying with a friend does tie you together financially.
This means if your friend makes poor financial decisions, you could be impacted.
Mr Sykes explained: "You are tried credit wise to the other and you are both jointly and severally liable for the debt.
"So, if doesn’t matter if you’d paid a lender 'your half' as you are both responsible for the whole mortgage payment - any missed payments by either party will be a negative credit footprint for years for the other."
He said it's best to make sure you are "contributing equally" or should opt for a "tenants in common" home ownership, which is where you each own part of the home.
This will avoid any issues if you have any disputes with your friend or relative, as you both own your own shares of the home.
The other type is "joint tenants", which is where you both own the whole home equally.
Overall, whether you buy with a friend, parent, sibling or partner, lenders won't look at it any differently financially, Mr Sykes said.
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"Lenders are no less likely to accept a case where you are buying with a friend or family member rather than a partner, as long as the financials of the deal stack," he said.
In light of the rise in people buying homes with their pals, Equifax has launched a "family and friends"; subscription, allowing up to three users to check their credit report for £23 a month.
What is happening to house prices?
Knowing when is the best time to buy a house can be a tricky business. Here's what is happening with house prices this year...
There were mixed predictions among lenders and estate agents for whether house prices would go up or down in 2024 at the start of the year.
HSBC and Nationwide said property prices would remain flat while Halifax, Rightmove and Zoopla projected drops of between 1% and 3%.
Lender Knight Frank was more optimistic, predicting house prices would rise by 3% while Nick Mendes, from broker firm John Charcol said he expected an increase of 2% to 4%.
The latest data from the Land Registry shows in actual fact prices have risen by 2.2% between May 2023 and the same month this year, with the average UK house price standing at £285,000.
In the 12 months prior, house price growth increased by 0.7%.
It comes with the Bank of England's (BoE) base rate at a 16-year high of 5.25%, adding pressure to homeowners.
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