We are pooling resources to buy a nicer property than we could ever afford separately but need advice on mortgage providers
Q We are three friends living in Canterbury. We each have salaries of around £45,000. We would like to buy a home together – by pooling our resources we can have a much nicer house than we could ever otherwise afford. However, we are unsure which mortgage provider to approach.
We would also each be contributing different deposits. We have heard that some will lend multiples of our combined salaries, but those we have found seem only to lend multiples of the larger salary, plus the second salary.
We are unsure of how to proceed, as it is important to us to be able to have reasonably separate living quarters rather than a house-share, and we feel that we can each afford a mortgage of £150,000 anyway. What would you suggest? ME
A There are about 40 mortgage lenders who are willing to lend to multiple borrowers – typically up to a maximum of four on a joint mortgage. But, according to Moneyfacts, only two banks – Bank of China and HSBC, and six building societies Beverley, Ecology, Furness, Mansfield, Principality and Stafford Railway, will take all three incomes into account when assessing the mortgage application. Some of those lenders will lend only on properties in their local area.
The other lenders who will lend to multiple borrowers typically look only at the two highest incomes, while a handful will look at a multiple-mortgage applications on a case-by-case basis.
The fact that you will each be contributing different deposits isn't of interest to your mortgage lender as the total joint deposit is what matters. However, you do need to take account of the variation in what you can put down in cash when working out your percentage shares in the property. To do this, take your share of the mortgage plus your deposit, divide by the purchase price and multiply by 100.
All that assumes that you proceed with a joint purchase, which I'm not convinced is a good idea because it's hard to reconcile your wanting to buy a home together with also wanting to have "reasonably separate living quarters rather than a house-share". You might well be able to buy a much nicer house by pooling resources but you would actually have to share it and make joint decisions about how it's decorated, maintained, cleaned and so on. If what you really want is your own separate living space, I don't think a joint purchase is going to work.
Before committing yourselves to all the costs involved with buying property, perhaps you should try pooling your resources to rent somewhere nicer than you could afford on your own to see how sharing a home works out. You may well decide that buying a small place that you can call your own is preferable to a bigger communal home.
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