Buying a House with Friends: Is It for You?
Got a friendship that would make Rachel and Monica look tame? Want to live together, but the rent prices make you queasy? Have you thought about the alternative option: co-buying? Whether you’re freshly graduated and need a little place, or you want to get a real foot on the housing ladder, co-buying with a friend could be the answer. But what should you know first? There has to be a catch somewhere, right?
Head on over to your nearest Central Perk, and let’s discuss.
How does buying a house with friends actually work?
It’s 100% possible to buy a house with friends. You do it through a process called co-buying. Not going to lie, it’s more complicated than buying with your spouse or partner, but you can do it. Co-buying means you end up purchasing a property as tenants-in-common, with each one of you owning a portion of the property. Everyone signs one mortgage from one lender.
What to consider:
• How well do you know your friends?
Just so you know, you won’t be able to go on a break if you buy with your friends. Make sure that you trust your friends implicitly and be honest about your finances. When you get a mortgage together, you're all 100% liable if someone defaults or forgets to make a payment, no matter the percentage you own. The actions of others can affect your credit score for the future.
• Can you get qualified?Buying Multiple Properties
Not all lenders will work with co-owners, so make sure you’re willing to spend time hunting around. Alongside that, all co-owners need a down payment and evidence that they can pay monthly fees. If that makes your eyes pop, I’d suggest getting support from a mortgage broker. Mortgage brokers have connections with ample lenders, finding you the one that's right for your crew. Not to mention they’ll give you personalized advice.
• Who gets what percentage?
It’s okay if you don’t want to share your food, but co-buying means you’ll have to at least share the property. This can be done equally, or you can get creative with how you split. Is one friend contributing more to the down payment? Do you have a resident DIY expert who plans on making improvements? Should these friends get a higher percentage? You’re gonna want to go in with a game plan.
• Is everyone fine with commitment?
Before you make a proper decision, think about the commitment you’ll be making. Remember, co-buying is a legal agreement that binds you together for years. Discuss the different possible scenarios. How will you sort maintenance and emergencies? Can you get over the sound of her eating? Will you be okay with him leaving dishes in the sink? The biggest question of all: are they your lobster/s (mated for life)?
“Well, maybe I don’t need your money. Wait, wait, I said maybe!”
If you’re planning on moving in with your friends, or you want to step up on that housing ladder, then co-buying is 100% a viable option for you. The biggest thing to remember is that you need to know the people you’re co-buying with like the back of your hand. And you need to be committed to your friendship, and the reasons behind buying together.
-Kyle Green
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