Most people are used to sharing accommodation as students, trainees or renters therefore the idea of living in jointly owned property is the next logical step.

Jane Harrison of London & Country Mortgages says, “Lenders generally take a pragmatic view of friends buying together and it is relatively easy for both to obtain loans of three times salary. But…one needs to go into it with very realistic views.”

The maximum number of names on a mortgage deed is legally limited to four. But, in any case, lenders take a dim view. “If you have three people together, it doesn’t help much in what you can borrow,” says Charcol’s Mr Boulger.

Lenders will take the best of two incomes and multiply that by three or four times. The third income will only be multiplied once.

Legally there are two types of joint ownership. You can either own the property as ‘joint tenants’ or as ‘tenants in common’. What ownership type you opt for depends on your particular circumstances and reasons for buying.

Under the ‘joint tenancy’ agreement the joint owners together own the whole property and do not have a particular share in it. If one of the owners dies, the other will automatically become the sole owner. This would apply even if a will had been made leaving the deceased owner’s ‘share’ to someone other than the co-owner.

The opposite of joint tenancy, ‘tenants in common’ means that each have a definite share in the property. This would be the most appropriate option if you wanted to own a property in separate pre-determined shares.

Under this form of ownership if one of the owners dies, his share of the property will pass on to whoever he specifies in a will, or if a will is not made, in accordance with the rules of intestacy.

Once you have decided on an ownership tenancy, the first things you need to consider are how much you can borrow and what is the most suitable mortgage for your circumstances.

You next need to consider carefully who you are investing with and should put measures in place to protect your investment.

Mortgage broker Ray Boulger of Charcol recommends co-buyers ask their conveyancing solicitor to draw up a legal contract. “We would always advise proper legal documentation where you buy as “tenants in common” which should detail what happens if either of you want to move on. Remember that if you buy together, each person is jointly and severally liable for the mortgage - even if you own just 25%, if your co-buyer defaults, you are responsible for the entire mortgage.”

To make the joint property investment work you will need to:

· Feel that the person you have chosen to invest and live with is trustworthy and is someone you could get on with
· Draw up a trust deed, or declaration of trust, and cohabitation agreement that you are both/all happy with
· Be reasonable with each other, discussing and settling any possible areas of dispute
· You will each be putting down separate deposits on the property. You will probably want to set up a joint bank account from which the mortgage payments and perhaps other household expenses are paid.
· How the profits from the house are split when you come to sell.

You will also need to discuss the following and know what you agreed between you:

· Amounts of deposits paid (the lump sum you have to pay at the beginning)
· What ‘share’ of the mortgage is each party going to pay?
· Home insurance, mortgage payment protection and critical illness payment protection
· Stamp Duty Land Tax
· Solicitors’ fees, searches, etc.
· House maintenance (decorating costs, roof repairs, etc).
· Cost of a surveyor
· What would happen if one of you was to die
· Lodgers/renters/how rental income is split
· Re-mortgaging, selling or finding a tenant

What you both or all decide about these issues will be covered in either the trust deed, declaration of trust, or co-habitation agreement.

Also remember that having a joint mortgage means that you are both or all responsible for keeping up with the mortgage repayments.

If any of the joint owners is unable to pay into the mortgage for any reason, the payments will still be required by the lender and alternative arrangements should be made to pay the mortgage.

While there are many issues to consider before entering upon an agreement, the benefits of owning a home, solely or with friends can be financially rewarding, especially in the rising property market today.

Luckily, as joint ownership is a developing trend, more and more mortgage lenders are offering mortgages designed specifically with joint owners in mind which makes joining the property market not such a distant dream.

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