Group Mortgages

Selecting a Co-owner For a Group Mortgage

Financially, owning a property jointly is something that seems to be a logical and sensible option. In practice, many people who would otherwise be keen to take this course of action are put off by the idea of sharing a property with someone else.

Selecting a co-owner is one of the most crucial decisions when it comes to obtaining a group mortgage. It is reasonably obvious that you need to get on with the person with whom you are considering owning a property. Unlike a standard tenancy, which can normally be terminable on a month’s notice after the initial six months or one year period is complete, when you own a property, not only do you have to wait until a suitable buyer comes along, but you are also likely to face extra costs of withdrawing from a mortgage product.

Group Mortgage Harmony
It is not just a matter of finding someone with whom you think you can live in harmony, it is also about finding someone who has similar aspirations and financial outlook regarding property ownership. Ideally, the property will be owned in the same proportions; therefore, all individuals should have roughly the same financial situation.

Having the same financial standing is useful, but not actually essential, provided the person with the better financial status is prepared to drop to the level of the person with the weakest financial standing. This may mean that someone who could otherwise have afforded a larger mortgage may end up with a lesser property. But, it is essential that everyone can amply meet the repayments as, if any one person fails to meet their part of the mortgage, the entire property is in danger of repossession.

From the outset, it is also important that you have a clear vision of what the future may bring in terms of sale and development. How long, for instance, do you intend to live in the property and what is the plan in terms of any improvement or renovation on the property

Planning the exit strategy for any property purchase is fundamental where multiple buyers are involved. What is the likelihood that one of the buyer’s jobs might require them to move away What will happen if something forces one person to move out What happens if one of the individuals decides they want to buy their own property, either on their own or with a partner

Not only should these issues be discussed in detail to ensure that everyone is working off the same page, but there should also be a legal agreement drawn up that deals with all of the likely permutations. Key issues that must be dealt with include the possibility that one person loses their job or there are irreconcilable differences between the individual owners.