| Property prices for even the smallest apartments | | | | they are a large sum, is for the share in |
| are beyond the reachof many first time buyers | | | | theownership of the property to be equal but for |
| nowadays. As a result, more and more peopleare | | | | each person's depositamount to be taken into |
| clubbing together with friends to share a | | | | account when calculating the mortgage |
| mortgage and ownership ofa property. It's a very | | | | repayments,so that those who put down smaller |
| good way to get on the property ladder, but | | | | deposits have a bigger share of themortgage. |
| assuch arrangements are never normally for life | | | | When it comes to one owner leaving or the |
| and one or more partywill inevitably want to sell | | | | property beingsold, each person's share in the |
| eventually, the fine details should beagreed clearly | | | | profit is determined by calculatingtheir share of |
| at the outset to avoid financial loss or the loss | | | | the current balance of the mortgage deducted |
| offriendships. | | | | from thecurrent market value of their share. This |
| The terms of a joint ownership mortgage are no | | | | is fairer than taking anequal share of the gain plus |
| different from a standard mortgage. | | | | giving each person back their depositamount, as |
| Regardless of the amount of deposit that each | | | | those who have been paying more towards the |
| person pays or the salarythat they are earning, | | | | mortgage as aresult of their lower deposits will |
| each shares equal liability for making themortgage | | | | actually have been paying moretowards the |
| repayments as far as the mortgage lender is | | | | capital than those who paid lower monthly |
| concerned. So ifone person stops making | | | | amounts becauseof their higher deposit. |
| repayments, the others will have to cover | | | | There are several different ways in which a |
| theirshare to ensure that the full repayment | | | | person's circumstances maychange, thereby |
| amounts are paid. It's up tothe joint owners to | | | | affecting their share of the mortgage and |
| decide how they will divide the mortgage | | | | property. Thedetails of what will happen in such |
| repaymentsand ownership of the property | | | | situations should be ironed out inthe legal |
| between themselves. | | | | agreement. |
| Clearly, a legal agreement is the best way to | | | | If for any reason one of the joint owners wants |
| ensure that everyoneunderstands their rights and | | | | to leave, there arevarious possible options:the |
| responsibilities. This isn't a sign ofmistrust, it's | | | | person keeps their share of the mortgage and |
| simply a guarantee of protection for everyone. | | | | property andrents out their roomthe person sells |
| Althoughnot compulsory when taking out a joint | | | | their share to the remaining owners who can |
| mortgage with friends, it'scertainly wise to do so. | | | | thenrent out the room if they wishthe share is |
| It won't cost much to have one drafted up by | | | | sold to a third party in direct replacement of |
| asolicitor. In fact so many people are taking out | | | | theperson leavingthe whole property is sold and all |
| mortgages in this waythat some mortgage | | | | parties leave |
| lenders provide specially tailored joint | | | | Insurance should be taken out as part of the legal |
| ownershipmortgages that include the drafting of a | | | | agreement to coversituations in which people are |
| legal agreement. | | | | unable to continue paying their share ofthe |
| Although the mortgage calculation is based on the | | | | mortgage for a period of time, for example |
| sum of everyone'sincomes combined, the | | | | because of illness, injury,redundancy or death. For |
| mortgage lender doesn't give people differentsizes | | | | illness or injury, insurance cover will normallymake |
| of share in the mortgage or property. How much | | | | their repayments for them for up to a year, and |
| each personcontributes towards the repayments | | | | if the person is stillunable to make repayments |
| is up to the joint owners to decide. | | | | after this, their share of the property will |
| It doesn't have to be directly related to each | | | | almostcertainly have to be sold. |
| person's salary. Thisshould be set out in the | | | | If one of the joint owners dies, life insurance will |
| written agreement. | | | | provide a lump sumto pay off the person's share |
| It can become more complicated in circumstances | | | | of the mortgage, and, depending on thelegal |
| where individuals haveput down different deposit | | | | agreement drawn up, their share of the property |
| amounts. However, again it's up to the | | | | will become partof their estate. Writing a will is a |
| jointowners to decide how they want to divide | | | | sensible precaution for ensuringthat the |
| the shares in ownership and inthe mortgage. | | | | deceased's estate is distributed according to their |
| If there's only a small difference in the amount of | | | | wishes. |
| deposits paid byeveryone, it can be evened out | | | | There are other things you'll need to agree such |
| informally by those who paid a smallerdeposit | | | | as whether thirdparties can live at the property, |
| making separate repayments to those who paid a | | | | and if so, for how long. You'll alsoneed to decide |
| larger deposituntil their contributions are balanced | | | | how you'll split the fees for buying and selling |
| out. | | | | theproperty. |
| Alternatively, you may decide that each person | | | | All of these issues should ideally be specified in the |
| has their deposit amountreturned to them upon | | | | agreement, whichis best drafted by a solicitor to |
| the sale of the property before the | | | | ensure that it's fair and legallybinding and covers all |
| remainingprofit is shared equally among the joint | | | | eventualities. Joint ownership with friendsshould be |
| owners. This tends to workbest in circumstances | | | | an enjoyable experience and you wouldn't want |
| where the deposit amounts are low. | | | | to lose out onfriendships or money as a result of |
| A common agreement for joint owners who | | | | misunderstandings. |
| have paid different depositamounts, particularly if | | | | |