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Buying property with friends: 7 things you need to know about being tenants in common

A joint mortgage can help you borrow more – but what if you fall out?

Most young adults would consider buying a home with friends to get on the property ladder, according to new research. So, is this a great shortcut to becoming a home owner or a potential minefield?

M&S Bank surveyed 5,000 people and found that 60% of 18-35 year olds would consider applying for a mortgage as part of a group when buying their first home.

Below, we explain the seven most important things you need to know about taking out a joint mortgage and becoming tenants in common.

  • Thinking of buying a property with friends? For impartial advice on your mortgage options, call Which? Mortgage Advisers on 0800 197 8461.

1. Up to four people can share a joint mortgage

Buying property with friends can help you own a home sooner, especially in an expensive housing market. The more of you there are, the more savings you’ll be able to combine for a property deposit.

If you buy with friends, you’ll probably need to take out a joint mortgage, which can have up to four names on it.

Everyone who’s named on a joint mortgage is responsible for making the monthly repayments. In the worst-case scenario, failure to do so could result in your house being repossessed, so it’s essential that you only take out a joint mortgage with people you trust.

  • Find out more: read Which? Mortgage Advisers’ guide to joint mortgages

2. You might be able to borrow more with a joint mortgage

When deciding how much to lend you, mortgage lenders look at ‘income multiples’. Most will offer you between four and five times your combined annual salary.

The majority of high street mortgage lenders only consider the incomes of the two highest earners when deciding whether and how much to lend on a joint mortgage.

However, a handful of providers – including Metro Bank, Skipton Building Society and Leeds Building Society – will look at all four applicants’ salaries, meaning you could potentially borrow more.

A mortgage broker such as Which? Mortgage Advisers (0800 197 8461) will be able to recommend the most suitable lender for your circumstances and help you apply.

  • Find out more: work out when you’ll be able to buy in your area with our deposit calculator

3. You could be impacted if a co-owner gets into financial difficulty

Being jointly liable to pay the mortgage is just one way you’ll be financially linked to those you’re buying with.

If one of your friends gets into financial difficulty, it could also affect your own credit rating. This could in turn affect your ability to take out credit cards or remortgage in the future.

If you’re concerned about the possibility of missing a mortgage payment, you should talk to your mortgage lender as soon as possible.

4. You’ll probably become tenants in common

There are two forms of property ownership when you’re buying a home with another person: joint tenancy and tenancy in common.

With joint tenancy, each of you owns 100% of the property, meaning that in the eyes of the law you’re a single owner. This is usually what married couples opt for.

Tenants in common is generally the best option when you’re buying with friends, as you can each own a separate share of the property.

5. Your shares in the property don’t need to be equal

Tenants in common you can own different-sized shares in the property. You might want to do this if, for example, people are putting in different amounts towards the deposit.

You can each leave your share to whoever you choose in your will.


6. If one person wants to sell, you all have to agree

One of the most important things to discuss before agreeing to buy a property with other people is what you’ll do if someone wants to sell.

Legally speaking, you’d all need to agree on it unless the person who wants to sell obtains a court order.

However, that’s not an ideal solution. It’s far better to draw up a legal agreement outlining the circumstances under which the property will be sold, how much notice will be required and what proportion of the sale price each person is entitled to before you actually buy the property.

You should all take independent legal advice to make sure the agreement is written correctly and fairly represents your interests.

Whether you’re buying with friends or a partner, it’s also crucial to talk about what would happen to the property if the relationship broke down – no matter how awkward the conversation might be.

7. You could be in for a lot of fun

Doom and gloom aside, buying a property with friends can be a really great option – and not just because it can get you onto the property ladder sooner than you otherwise might.

The M&S Bank survey found that 95% of 18-25 year olds thought there were benefits to living with others. These included:

  • having company at home (62%)
  • sharing the financial responsibility of a home (58%)
  • having someone to cheer you up when you’re feeling down (57%)
  • having a buddy to watch boxsets with (41%)

If you want to explore the possibility of buying a property with friends, fill out the form below for a free, no-obligation chat with an expert mortgage adviser.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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