The Pros And Cons Of Joint Mortgages

As independent as we all pretend to be, most of us couldn’t get by without the help and support of our family and friends. Therefore, when it comes to buying a house, more and more people are choosing the option of a joint mortgage. This is where people who are not romantically involved share in the purchase of a property to live in, or for investment purposes. You could choose to buy with your brother, sister, a parent, a friend or a colleague from work. You may even choose to buy with your housemates because you have had a great time renting together but want to get out of the rent trap.
Before you do though, make sure you consider the pros and cons of joint mortgages, and any contingencies which may apply to your situation to make sure that buying together truly is an investment in your future and in your relationship.

To make sure that buying a home or investment property with someone else will be worthwhile for your situation, consider whether you could benefit from:

· Saving a smaller deposit. When you are splitting the purchase of a property you are also splitting the deposit needed so you can get into the property market much sooner as you don’t have to accumulate the same balance of savings individually when you are pooling funds.
· Getting into a rising market. While some markets are recovering more slowly than others there is little doubt that the property market is beginning to boom again. Even disregarding a property boom, property prices are always going to increase through capital growth an inflation – not to mention demand. As a result it can be very hard to find a property which meets your needs and your budget but if you share the purchase price with a joint mortgage it becomes much more affordable.
· More affordable repayments. When you share the cost of mortgage repayments you may find you are paying around the same amount you were paying in rent, and instead you are getting into the property market and investing in your future rather than investing in your landlord’s future.
· Sharing the maintenance costs. There are more costs to owning a home than just the mortgage and there are repairs, maintenance, rates and levies to be paid throughout the year and in a joint mortgage agreement you don’t have to shoulder these alone.


The downsides of a joint mortgage can depend largely on the type of relationship you have with your fellow mortgagee/s and how prepared you are for that relationship to grow and change. When you take the time to consider the cons of a joint mortgage situation you will realize that circumstances can very easily change, and relationships shift, especially over the course of a 30 year home loan term.
Therefore, make sure you have contingency plans in case:
· Someone loses their job. The point of a joint mortgage is to make the costs more affordable, and if one person has to carry the financial responsibilities of another, affordability is lost. Therefore, decide on whether you should contribute to emergency funds to cover your own expenses if you lose your income, or does one person cover the costs for a certain number of months and the other pays them back when they have more work?
· Someone wants to sell. This could again be due to affordability, but one partner in the joint mortgage may want to buy their own home for their own family or gain some independence so do you both have to sell or are you willing to buy them out?
· Renovations are needed. You need to be clear about the future of the property and whether you are going to invest time and money to increase the value through improvements and renovations, or whether you want to direct extra funds to repaying the mortgage sooner.
· You have a falling out. In this case a mediator may be required to resolve the issues of what happens to the property, but keep in mind even the closet friends and family member have disagreements, especially where money is concerned.
Having such contingency plans can also lead to another downside of joint mortgages which is the extra legal costs involved with purchase and repayment agreements, and mediators if issues arise. Therefore, consider how your situation would benefit from a joint mortgage, and make sure you plan for every eventuality.

Alban is a personal finance writer at Home Loan Finder, which offers free home loan comparison services

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