Buying property with a mate
Discussion
Mods if you could leave this here just for a while..
Basically situation is this, I live in a rented place with a mate, he's joined the marines and will be away a lot from now on. He says he still wants his room here for when he comes back and will pay less for it.
However he also has 25k in the bank that he wants to put into a house, as opposed to paying rent on something he will not be in all that much.
He has asked me if I want to buy a place with him, I don't have any large lump sums to my name (at present) he has offered to use his money as deposit, and I'd just move in and pay the joint mortage, he would have the small room and use it when he came home every now and again.
Is this worth considering? Obvious issues would be if he gets shot, if one of us wants out (although buying out I suppose would work).
He's a good guy and I've known and lived with him for nearly 3 years.
What do you guys think to it as a plan?
Basically situation is this, I live in a rented place with a mate, he's joined the marines and will be away a lot from now on. He says he still wants his room here for when he comes back and will pay less for it.
However he also has 25k in the bank that he wants to put into a house, as opposed to paying rent on something he will not be in all that much.
He has asked me if I want to buy a place with him, I don't have any large lump sums to my name (at present) he has offered to use his money as deposit, and I'd just move in and pay the joint mortage, he would have the small room and use it when he came home every now and again.
Is this worth considering? Obvious issues would be if he gets shot, if one of us wants out (although buying out I suppose would work).
He's a good guy and I've known and lived with him for nearly 3 years.
What do you guys think to it as a plan?
If you know hims and trust him, then why not.
Make sure you do the contract, and agree what happens if either of you needs to sell up. You would be able to insure your mate to cover you in case anything happens to him, although given his line of work the premium may be eye-watering I suspect.
Make sure you do the contract, and agree what happens if either of you needs to sell up. You would be able to insure your mate to cover you in case anything happens to him, although given his line of work the premium may be eye-watering I suspect.
The legal aspects of this need to be formally set down in a contract. Things to consider, right of occupancy in the event that one of you die, who is his next-of-kin and are you happy to be locked into this house with that person, long term may see one or both of you with spouses and even children, your rights change as this happens and so the contract of shared occupancy needs to be future-proof.
If you or he can afford it and wants a house, I'd be taking it on personally and taking the other as a lodger, or if you want to split the mortgage formally it needs an airtight legal contract which covers a whole host of possibilities. I've seen this sort of arrangement go wrong a couple of times and it wasn't pretty, so getting it set in stone beforehand is essential imo.
Yes, it would be done properly if it went ahead. In terms of deposit, I suppose the easiest way would either to start paying him back the 12.5k share that I'd be borrowing from him straight away?
Or would it be easier for him to take it out of the eventual sale price?
Our combined salary when he is fully fledged in about a year should be fairly high so I suppose finding a lender shouldn't be an issue... Only slight snag I guess would be that I'm 22, although pretty sure my credit score is high.
Or would it be easier for him to take it out of the eventual sale price?
Our combined salary when he is fully fledged in about a year should be fairly high so I suppose finding a lender shouldn't be an issue... Only slight snag I guess would be that I'm 22, although pretty sure my credit score is high.
Edited by okgo on Saturday 29th May 10:22
Credit wise getting a check done costs nowt, couple of quid or they normally chuck you freebie ones if you use any of the cashback sites (quidco, top cash back et al).
Deposit wise I guess is up to you both to decide, get a loan, pay him back on a monthly basis or just pay a slightly higher percentage of the mortgage.
22 is pretty young to be tied down to a house, I took my first one on at that age and would have regretted it if I didn't have the easy option of selling it to my folks this year (27 now). Fair play if that's what you want though
I just couldn't imagine sharing a house with someone contractually, too many ifs buts and maybes that might crop up in a few years time.
Deposit wise I guess is up to you both to decide, get a loan, pay him back on a monthly basis or just pay a slightly higher percentage of the mortgage.
22 is pretty young to be tied down to a house, I took my first one on at that age and would have regretted it if I didn't have the easy option of selling it to my folks this year (27 now). Fair play if that's what you want though
I just couldn't imagine sharing a house with someone contractually, too many ifs buts and maybes that might crop up in a few years time.Edited by Stu R on Saturday 29th May 10:27
Get an airtight contract written, what happens if one of you gets a job miles away and wants to buy a house closer to work? What happens if one of you gets made redundant? what happens if the house goes into negative equity at the time you want/ need to move? what happens when one of you needs cash quick? without a good contract then you are asking for problems especially as you are young and in 3 years could be looking at working the other end of the country you need to cover all the eventualities. I would also say buy something that either of you could just about afford on your own as it will simplify things when you come to going your separate ways, assuming there is no relationship here.
Engineer1 said:
Get an airtight contract written, what happens if one of you gets a job miles away and wants to buy a house closer to work? What happens if one of you gets made redundant? what happens if the house goes into negative equity at the time you want/ need to move? what happens when one of you needs cash quick? without a good contract then you are asking for problems especially as you are young and in 3 years could be looking at working the other end of the country you need to cover all the eventualities. I would also say buy something that either of you could just about afford on your own as it will simplify things when you come to going your separate ways, assuming there is no relationship here.
All very valid points, and much like tonker suggested. They would be key in this. My industry is in almost all in London so I shan't be leaving here anytime soon.I did this years ago, we went 50/50 on the deposit and set in place a formal(ish) review after 1 year. if either of us wanted to move on we would either have one of us bought out or sell. all based on market values etc. We did this in 1985 as house prices were going up so fast we assumed it would be a good way to make some cash. After a year the placed was valued at 50% more than we purchased for so we sold and bought our own houses. it all worked very well. just make sure you agree and get a solicitor to draw up an agreement.
Yes, another mate of mine lives with two of his mates in this situation, so I will talk to him about his contract abotu women etc.
However the difference with my situation to most is that he will be away a LOT of the time with the Navy. He is incredibly easy going, and very honest. Probably one of the most decent people I know. He has said that I can pretty much do whatever while he is away, so I guess it wouldn't be an issue for GF's to move in (as long as we are careful about rent contributions with a rent book etc).
If he was living here all the time then I wouldn't probably do it because we both have gf's. But because he will have to end things with her and is away for 6 months of the year and back only so often it will be fine for a few years I think.
I think I'll look into it.
I'm guessing its best to speak to an advisor for what would be a sensible amount to borrow, our combined income at the time of doing it will be around 60k.
However the difference with my situation to most is that he will be away a LOT of the time with the Navy. He is incredibly easy going, and very honest. Probably one of the most decent people I know. He has said that I can pretty much do whatever while he is away, so I guess it wouldn't be an issue for GF's to move in (as long as we are careful about rent contributions with a rent book etc).
If he was living here all the time then I wouldn't probably do it because we both have gf's. But because he will have to end things with her and is away for 6 months of the year and back only so often it will be fine for a few years I think.
I think I'll look into it.
I'm guessing its best to speak to an advisor for what would be a sensible amount to borrow, our combined income at the time of doing it will be around 60k.
okgo said:
However the difference with my situation to most is that he will be away a LOT of the time with the Navy. He is incredibly easy going, and very honest. Probably one of the most decent people I know. He has said that I can pretty much do whatever while he is away, so I guess it wouldn't be an issue for GF's to move in (as long as we are careful about rent contributions with a rent book etc).
Please believe me when I say that "they all say that" - and still it ends in tears and court. Bear in mind also that some people can shall we say get badly influenced by people who may not have quite the same moral fibre as your mate.The best way to sort this out is to have a very good contract which covers all these things.
ETA - and make sure it covers what happens if the place goes down in value as well as up (i.e. how is the profit or loss split), and what conditions are met before it can be sold etc...
Edited by Jasandjules on Sunday 30th May 12:52
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