“There are no strangers, only friends we haven’t met yet.” According to Irish poet, W. B. Yeats.
It’s a nice sentiment, but does it apply to first-time buyers?
Unfortunately, the outlook for potential first-time buyers is so desperate that 59% are open to the idea of co-owning a property with a stranger, according to HSBC. Further still:
- 80% would buy a house with someone they did not intend to spend their life with
- 5% would go so far as to buy a home with their ex
- 4% would purchase property with someone they met in the pub!
These figures show a bleak reality for those looking to buy their first home, but is it necessary to go to such extreme lengths to own your home?
The reality of buying with a stranger
Sharing with strangers is fine if you are renting, in student accommodation, or a contestant on Big Brother. But, it is not ideal for a commitment as large as buying a home.
There are many ways that buying a home with a stranger could lead to difficulties, in both the short and long-term, including:
Disagreements: Every relationship has its ups and downs, but what happens when it’s with someone who isn’t necessarily invested in you emotionally, and vice versa? It can be easy to discover that you are not compatible with someone when you are too far into the buying process to turn back, without difficulties.
The need to move out: Your lifestyle and circumstances are likely to change dramatically as you move through life. Sharing a home with a stranger might suit you perfectly in your 20s, but what happens when you’re ready to move on? When you rent a home together, it is much simpler to end a contract and find a replacement tenant. However, co-owning is different and there will be a host of decisions to make, including whether one of you will buy the other out.
Financial shocks: What happens if you, or the person you co-own your home with, were to fall ill, suffer an injury, or die unexpectedly? Apart from the obvious emotional and lifestyle changes, it would affect the household finances. If one of you is suddenly unable to make mortgage payments, or contribute to the bills, it could put both of you in financial jeopardy.
To deal with these possibilities, you will need to put agreements in place. These will ensure that you both have sufficient insurance and savings to cover the household costs if either of you should face financial difficulties.
There is a huge amount of trust involved in being joint owners of a property that you are likely to be paying for, for at least 30 years, so make sure that you are confident in your decision before making a commitment.
Tips for making it on your own
If the thought of buying a home with a stranger makes you feel uncomfortable, its probably not the right option for you. To get onto the property ladder without resorting to such extreme measures, you could:
Consider buying with a sibling
You already know what it’s like to live with your brothers and sisters. In addition, convincing a relative to help both of you at the same time is likely to be easier than asking for two separate deposits. In addition, it is easier to settle disputes with someone you are so close to.
Make compromises
A five-bedroom home, set in acres of low-maintenance gardens, with a pool.
It sounds great, until you look at the price.
Admittedly, your must-haves are probably a lot more reserved than this. But, it might be worth re-evaluating what is an essential, and what you can live without to make buying a home more affordable.
Remember, there are many features which you can add to your property later.
Keep saving
Unfortunately, saving a deposit to buy a house is a long game. But you can make sure that you are doing everything possible to ensure your money is working efficiently, by:
- Opening a Lifetime ISA (Available for 18-39-year olds and benefiting from a 25% government bonus on deposits of up to £4,000 per year)
- Reviewing your credit score to put yourself in a position to be offered a mortgage at the most competitive rate
- Asking family for help; whether it’s large amounts, or instead of gifts for special occasions, it all helps
- Looking into schemes designed to help first-time buyers, such as Help to Buy loans, low-deposit mortgages and Shared Ownership
For more information, or to discuss your options, contact us on 0800 612 8099 or request a call back by clicking here.