Mon 11 Mar 2019
Lee Whitelock, Director MNAEA
After research, M&S Bank has launched its “mortgage for four”. According to Paul Stokes, head of products at the bank: "The option of becoming a mortgage-mate is particularly appealing to those already in a housemate arrangement, and our research shows that the concept has become increasingly popular with millennials.”
Courtney and Alex McClure are currently buying a six-bedroom south London property with another couple. Together they can afford to buy in a "much more appealing" location, says Courtney, however she stresses that the decision is about more than money.
"It's such a big thing. You're sharing your world. I think if you were just doing it for cost reasons, you probably wouldn't enjoy it."
The plan is for each couple to occupy a floor, sharing the cost of renovations and maintenance. For Alex it seemed an obvious option: "If you don't have rich parents, how else are you going to get on the housing ladder?”
But what of the risks of co-buying? Lenders are starting to offer mortgages for three or more people, but this is not the norm. Many, including one of the UK’s largest, Nationwide, restrict their products to two people.
The main issue occurs if one of the people buying wants to move on. According to David Hollingworth from mortgage broker London & County, this would mean, “the other co-buyers would either have to buy them out or, if they can't afford that, be faced with the prospect of selling the property.”
He explained that if four people's names are on a mortgage, but one stops paying, the lender can demand full repayments from whoever they can reach.
Co-buyers are therefore encouraged to formalise each party’s obligations in a legal document, such as a deed of trust, which specifies how the property is held and what happens if someone wants out.
Read more about this story on the BBC website.