If you are having difficulty viewing this email, click here
 |
|
 |
|
 |
Issue 48 - June 2007
![]() |
|
|
|
With interest rates on the increase and house prices still firmly on the up there is an increasing trend for people to buy with friends using a so called 'Mates Mortgage.' But is this a solution to the problem of getting on the housing ladder or a recipe for disaster? This week we look at the implications of buying with a friend and suggest some of the things to consider before taking this route.
|
| How do you get started on the housing ladder? With property prices increasing monthly and average prices in England and Wales currently poised to break the £200,000 barrier many first time buyers are starting to think that it's just impossible to get on that first rung. |
|
 |
Even if you are able to raise that all important deposit and persuade a lender to advance you the balance, how can you afford the monthly mortgage repayments and be able to eat at the same time? One solution is to join up with friends and pool your resources. Many lenders are recognising this trend and over 60 now offer 'mates mortgages' enabling buyers to team up in groups of up to four and buy jointly. In fact, according to research from HSBC 57% of potential first time buyers are considering buying a property with friends and they also report seeing a 50% increase in group mortgage applications received by them so far this year. However, before rushing into this there are a number of issues that need careful consideration.
HOW DO THESE ARRANGEMENTS WORK?
On the face of it these arrangements are very straightforward with friends getting together (groups of two to four people are able to do this) to pool their resources and incomes to purchase a property between them. However, there is a difference in the way that lenders will calculate how much they will lend so you may need to shop around to find the lender that will best suit your requirements. Some lenders, for example, will only take the two highest incomes into account whereas others may take up to four incomes or just look at the overall affordability of the group as a whole. Lenders that will take all four incomes into account include Britannia, HSBC and Skipton but it may be best to speak to a mortgage adviser who can do the shopping around for you and negotiate with the lenders on your behalf.
WHAT ARE THE PITFALLS?
As with most things, these arrangements can work well if everyone gets along, acts responsibly and fulfils their obligations to the other parties. But, there is a huge potential for things to go horribly wrong if you go into this with insufficient organisation, understanding and/or agreement.
Legal Liability
The first thing to consider is that, from the mortgage lenders point of view, each party to the mortgage is responsible for the entire mortgage debt and monthly repayment. So whilst you may decide to share the mortgage repayments and each pay a proportion, in the event that one party to the mortgage misses a payment the lender will look to all other parties to make up the shortfall. In other words you are all jointly and severally liable for the total mortgage payment and regardless of the fact that you have paid your share, if other parties have not, the lender will look to you to make up any shortfall. If the mortgage goes into arrears as a result you could find your credit file marked and your credit history adversely affected. |
 |
2 great reasons to review your live cover today.
Go >>> |
|  |
|
|
|
 |
Compare the market to find the best deal
Go >>> |
|  |
|
|
|
| |
 |
Compare 0% balance transfer cards plus many many more.
Go >>> |
|  |
|
|
|
 |
Get impartial advice from one of our experts
Go >>> |
|  |
|
|
|
|
Swinton Car Insurance | | | | | | |  | | Up to 20% off when you buy online. Cheap quotes from the UK's top insurers. | |
|
Tesco General Insurance | | | | | | |  | | What's on your insurance shopping list? No need to shop around – great deals for all your insurance and finance needs at Tesco | |
|
Hiscox Home Insurance | | | | | | |  | | Comprehensive cover for possessions worth over £45k. Competitive premiums. Outstanding claims service | |
|
|
|
 | |  |
| spotlight on...
| |
| credit cards | |
|
Barclaycard Platinum
 Typical 14.9% APR
variable
0% on balance transfers
for 12 months
0% on purchases for 3 months
MBNA Platinum Plus
Typical 15.9% APR
variable
0% on balance transfers
for 12 months
0% on purchases for 3 months
MBNA Platinum Rewards
Typical 15.9% APR
variable
0% on balance transfers
for 12 months
0% on purchases for 3 months
| |
| life insurance | |
|
Norwich Union Life
Life Insurance from the UK's
largest insurance company
From as little as £5 a month
Get a personal quote online
today
Life Cube Life Insurance
Compare 200+ life plans
in minutes
Life cover from £5 a month
Cheap life insurance quotes
| |
| mortgages | |
|
Debtbuster Mortgages
WHY waste time searching
when we can do it for you.
FREE search of 100+
remortgages. Exclusive deals.
You could HALVE your monthly
outgoings.
Bad credit OKAY.
Quick decisions
Lloyds TSB Mortgages
Flying Start Mortgages
designed especially for
first time buyers
Let our specialists
take the worry out of
buying your first home
The Mortgage Lender
Remortgage and raise cash now
Remortgage today and
save thousands
Friendly experts. Quick
decision. No upfront fees
CCJs, bad credit, arrears?
All considered
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
| |
| unsecured loans | |
|
Northern Rock Low Rate Loan
6.5% APR Typical on
£1,000 to £25,000
Instant online decision usually
provided
Same day funds option
| |
| homeowner loans | |
|
Picture Loans
Typical 8.4% APR
variable
£10,000 to £100,000 over 10 to
25 years
Any purpose secured loans at
competitive rates
Nemo Homeowner Loans
Typical 8.9% APR
variable
Secured loans with a
loyalty bonus
Borrow £10,000 to £100,000
Repayments over 10
to 25 years
|
|
| adverse homeowner loans | |
|
Loans.co.uk
Typical 12.9% APR
variable
£7,500 to £100,000 over 5 to
25 years
Nothing to pay for first 5 months
Get a free quote today
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
| |
|
Moneynet is a trading name of Sterling Business Consultants Limited of Sussex House, 8-10 Homesdale Road, Bromley, BR2 9LZ. Registered office is 51 Eastcheap, London EC3M 1JP, Reg No: 03165711. Moneynet is authorised & regulated by the Financial Services Authority. This site is intended for UK residents only. Information correct at time of publication.
Click here to unsubscribe from the Moneynet newsletter
|
|
|
|
|
