Shared Mortgage

[squarepants]

Hi, I am considering entering a mortgage share with a group of friends sometime in the near future, as property prices are so high. We are all looking to stay in our home village, but cannot get a mortgage singally.

I know a mortgage share will increase the amount we want to borrow, and therefore put us in a better position as far as size of property and location are concerned, but I am a little blurry on how the repayments would work. Would the repayments be the same amount for all involved in the share or would they be more or less according our salaries??

Thanks in advance, Bxx

[Hawkwalk]

The repayments are entirely up to the group to decide as is the percentage of the property owned. The mortgage company will just want the full repayment and will not care who pays what. If you all have an equal share then you should pay the same amount.

You should speak to a few mortgage companies because they may not lend to groups.

I think you need to consult a solicitor and ensure everything is well covered if you go into this with friends. It could all end in tears and mean the break up of friendships if everything is not open and discussed fully before doing this.

You need to consider what happens if one person wants to sell or someone cant pay a month plus a whole host of other scenarios that could cause an upset.

[CheekyChops]

Well I would imagine that if you are each putting in the same amount of the deposit and you are each owning an equal share, then you will all pay the same amount.

[Ethel]

That depends on how you've borrowed - a could borrow 30%, B & C could borrow 25% each; and D could borrow 20%, in which case the mortgage should be paid in similar per centages.
Equity would be divided as above when the property is sold.

If you all own and contribute 25%, then 25% of the mortgage should be paid equally, with the equity divided by four.

The amount of salary should have nothing to do with it, unless you come to an agreement between yourselves.

[squarepants]

Thanks for all your info and advice, I'm hoping that as we're a close group of friends any discrepencies would be solved as soon as they arose, however nothings plain sailing so fingers crossed!! Bxx

[squarepants]

*arise, even!

[Eve]

Make sure you have a proper deed of trust drawn up as to what happens when the proeprtyis sold and preferably to deal with the eventualities of someone not paying their part of the mortgage or not being able to.

I'd strongly suggest drawing up an agreement between all of you as to whatever is agreed and covering all possible eventualities.

Remember the debt will be joint and several and they can come after any of you for the money, usually the one with the most income or other assets would be the target.

What happens if someone gets into another debt and charging orders or bankruptcy or IVA notices or similar are put on the property meaning there are restrictions on sale.

What if one or some want to sell and the other don't, what happens then, check into overreaching and the ability to force a sale.

You need proper advice from an independant financial advisor and a decent lawyer.