Recently, a lot of big insurers have heralded a new type of “first time buyer mortgage” – one where a group of friends can buy a place together. At first glance this may seem an attractive proposition, however there are a few things to take into consideration.

- What happens when someone wants the Other Half to move in? What happens if someone in the household gets pregnant and suddenly there’s a child in the house?

- What happens if someone cannot pay their bills or falls behind with the mortgage? How will you cover this shortfall, and what do you do if it is a long-term problem?

- What happens if one person is declared bankrupt, or runs up huge debts? If one of your friends is declared bankrupt, it will have a negative effect on your credit rating.

- What if someone loses their job and is unable to cover their share?

- What if the place is a mess and only one or two people are doing all the household chores?

- How do you feel about ownership of the goods within the property? What is ‘communal’ and what is ‘yours’?

- Do you all have the same outlook on life? Friends may visit from time to time and this could turn the place into something resembling a nightclub or a hostel. Are you all on the same wavelength and happy with how the house could be used?

- What happens if someone wants to leave the house and move elsewhere? Do the remaining people try and bring someone else in to cover the mortgage, or do the remaining friends want to buy that part of the mortgage?

- What happens if someone wants to sell the house in the future to capitalise on the rise in equity on the house?

One of the biggest considerations – and one which most people write off – is what happens if you fall out? Friends fall out all the time. If something goes missing in the house, suspicions may be aroused causing tensions within in the house. It is one thing to go on holiday with your friends for two weeks – could you really put up with living with them for the next few years? If you are seriously considering buying a house a together, it is well worth renting together for six months. This not only shows whether you do all get on whilst living together (and seeing all their nasty habits on a daily basis!) but also will show up who, if anyone, is a late payer, or who has problems managing their money.

You will need to be aware of which lenders will give you a friends joint mortgage – many lenders will only take into consideration the earnings of the two highest paid people. To find a lender who considers all earnings may reduce the mortgage choices you have and you may therefore end up with a poor rate.

Once you have found a mortgage provider that you all agree on, it is extremely important to hire a good lawyer to draw up a contract to ensure that any problems, such as those above, can be dealt with effectively.

Click here to see a list of current mortgage providers.

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