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