Group Mortgages

Overview and basics of a Group Mortgage

When it comes to getting on the property ladder, today’s borrowers are having to become more and more ingenious in their approach. The average house price is now nearly £180,000, which is the equivalent of six times the average salary. Very few people are prepared to borrow that amount; therefore, single buyers are often left out in the cold when they want to get a foothold on the property ladder.

In an attempt to offer a broader range of people the opportunity to take out mortgages with them, lenders are starting to offer new ways of enticing more borrowers to become their customers. One of the latest options includes allowing groups of friends to buy a property together, thus pooling their resources to enable them to purchase their dream first home.

57% of all first time buyers said that they would consider buying a property with a friend
Interestingly, when surveyed, 57% of all first time buyers said that they would consider buying a property with a friend. And why not After all, unmarried couples are prepared to purchase properties together, so why should this principle not extend to groups of friends It is now estimated that group mortgages make up between 2 and 3% of all mortgages currently taken out in the property sector. This is indicative of a 50% increases in the number of applications for group mortgage being received by high street banks.

Group Mortgages – The Basics

Group mortgages are being offered by many high street banks and are available for groups of between two and four people. The amount that can be borrowed is based on the incomes of the individuals within the group and the property is then owned in equal proportions. For example, a group of four people would each own 25% of the property.