Buying a house with friends

al87987

Sorry if their was a recent thread on this but couldn't see one started in the last 5 years so here goes...

Looking into buying a 3/4 bedroom house with 2 or 3 friends, just spitballing it at the minute, but wanted to get opinions or advice, rough guess of the figures would be:

3 bedroom for 250k-ish (Tallaght area) or a 4 for closer to 300k. We are all single lads in their late 20's with steady jobs and not much interest in paying rent if its more costly than a mortgage which seems like the case.

We would all need to individually come up with approx 80k and we'd be looking for a place that we'd be happy to live in for 5 years and try and cannibalise our mortgages as best we can.

I would be trying to finance mine through deposit (30) and maybe a 50k mortgage or see if the bank of mam and dad can help us out a little.

Is this viable in the slightest or a pipe dream?

We would obviously have contingencies in place for price drops, unexpected family stuff etc...

Any and all help appreciated

Interested Observer

Imo, it's a really bad idea to get that financially tied to people who aren't your significant other. I would not even entertain the idea to be honest. When money is involved, people will fall out, it's almost a certainty.

Sorry if this post isn't that useful or the advice you're looking for but honestly, don't do it.

Outkast_IRE

Not a hope it will end in disaster.

With the best intentions in the world and as much foresight and planning as you want.

1. What if one of ye meets a girl and wants her to move in ? Or wants to sell up their share to live with the girl.

2. What if for one reason anyone of ye wants out ?

3. What if you find you hate living with these people or they wont pull their weight in chores or upkeep ?

4. Will they all be willing to pay up if the boiler needs replacing etc.

This is an easily avoidable minefield stay well clear.

Rubberchikken

I would do it but not before doing all my homework on what's involved. Everyone needs to be honest about what they can contribute and what they expect over the next 5 years.
People change. People's lives change and these things need to be addressed out front.
It makes sense to put money into something that can be sold and may even yield a profit rather than paying rent you'll never see again.
It would need to be drawn up legally and covering most eventualities but is doable imho.
Good luck

bucketybuck

I can think of few worse financial decisions than buying a house with 4 other lads in their twenties. It's a horrendous idea and you should walk away immediately.

OnDraught

I’m 33, 7 years ago I was living with my mates having the craic. Now the weddings and babies are coming thick and fast for nearly all of us. People start settling down fast once they hit 30.

MysticMonk

I bought a house with a girl i was supposed to be getting *married* to and it all ended in tears and was very expensive and onerous all round. Doing it with "three or four" mates is probably the worst thing you can even think of doing.

Hollister11

Don't. It will end in tears, and really test your friendship.

bisset

There was a location location location episode set in Belfast where three lads did that. My memory is when they went back for the Revisited episode it had worked out.You would need to each have independent legal advice.

it would be different to buying with a partner because you would know from the begining that it would not be till death does us part. Maybe it would be better to buy with one person and then have a lodger rather than trying to buy as a group of three.

Grumpypants

The biggest hurdle is what happens when one wants to settle down. How do they get out. They can't really put 25% of a house on the market so ye would have to buy him out or some other messy situation.

Then what happens if you get a 10 year mortgage and your budfy needs a 15. After you are mortgage free the house isn't.

Ursus Horribilis

Would that also mean that everyone would lose their first time buyer's status and need a 20% deposit for their next house?

myshirt

Yes it does. The interest rate and terms will also likely be punitive. You have to consider op that each and all of you will be jointly and severally liable, which means if someone doesn't stump up then you will have to. That means upside for them if you do well in life, and downside for you because you don't take their property rights even if they are not paying their share.

I don't know if it is worth it for such a low value asset. You want a minimum 1m asset to justify the cost and risk. You don't often see these transactions below that.

pauliebdub

I did it years ago and it worked out really well. In fact we still own the house, but I knew him as a steady reliable sort so I never had too many doubts. I'd be reluctant to buy with more than one.

Eric Cartman

I'd advise against it but if you insist then id rent with them all for atleast a year first and have an agreement drawn up with some conditions.

1) each room is to only be inhabited by 1 person, if you want to live with your missus you sell up your share to the others or let it out.

2) all repairs to have cost shared equally

3) have a sinking fund between yee of say 5000 at all times incase something happens and needs to be done quickly.

Bigus

https://www.linkedin.com/pulse/buying-property-others-co-ownership-agreements-tom-meagher

BrokenArrows

It is a bad idea.

No bank will give you multiple separate mortgages on the same house.
You will all need to apply for a single mortgage together and you will all be responsible for its repayment.

Likely Problems:
1. One or more of you gets into financial trouble and other others need to pay your share of the mortgage which will cause a lot of hassle.
2. One or more of you wants to sell and the others dont want to sell and dont want to buy the other out. Are you going to want to sell to and live with a stranger?

You will need a crystal clear exit strategy in these scenarios.
And you will need a crystal clear legally binding agreement about your friends repaying the others of any missed mortgage payments.

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Fian

BrokenArrows wrote: »

It is a bad idea.

No bank will give you multiple separate mortgages on the same house.
You will all need to apply for a single mortgage together and you will all be responsible for its repayment.

Likely Problems:
1. One or more of you gets into financial trouble and other others need to pay your share of the mortgage which will cause a lot of hassle.
2. One or more of you wants to sell and the others dont want to sell and dont want to buy the other out. Are you going to want to sell to and live with a stranger?

You will need a crystal clear exit strategy in these scenarios.
And you will need a crystal clear legally binding agreement about your friends repaying the others of any missed mortgage payments.

This is why it is a bad idea. The bank will insist on joint and several liability for the mortgage repayments. this means each of you will be liable to pay the whole mortgage payment in full. It will be up to you to sort out "shares" between yourselves, as far as the bank will be concerned any and all of you will be liable to meet the full mortgage.

so if one of you misses your "share" of the payment you are all in mortgage arrears, all going to have a mark on your credit register and all liable to make it up. If someone loses a job the others will be faced with making the payments or going into arrears. If one of you gets sick of it and emigrates - tough luck on the others.

You are effectively giving an unsecured loan to each of the other parties in the amount of their mortgage liabilities.

You can make these kind of commitments with someone who is your partner in life, or perhaps with immediate family, not with "mates".

Don't do it.

Ursus Horribilis

I've seen many a thread on boards where things go sour once a boyfriend or girlfriend comes on the scene. At least in rented accommodation there's the option of moving out. You're all in your late twenties and at the age where relationships tend to get serious more quickly. You could all be in a very different place in your lives in two or three years time.

bucketybuck

Ursus Horribilis wrote: »

You're all in your late twenties and at the age where relationships tend to get serious more quickly. You could all be in a very different place in your lives in two or three years time.

Indeed. Is there any age group more volatile than that of people in their twenties? Is there any group of people more likely to have massive changes in lifestyle and circumstances over a short period of time? I doubt it.

People in their twenties are far more likely to meet partners and leave partners, to find a new job and leave a job, to decide to go abroad for whatever reason, to basically change as a person now that they are out in the real world having experiences.

You might trust your mates today but they won't necessarily be the same people in 5 years, and most definitely won't all be in the same circumstances.

Pelvis

If I had to nominate the worst 5 ideas of all time, this would be one of them.

Mitzy

Sorry OP but I'm with the others here on it being a bad idea.

While everyone has mentioned about what happens if someone moves on & gets married etc you also need to consider what could happen in the unfortunate event of another property crash (sorry to mention that word). What would happen if someone loses a job or simply decides to walk away from their liability to the debt.
This would have a catastrophic effect on your own income & credit rating.

Also on the other side what will happen if the property value rockets & they want their equity released to buy a family home. Can you afford to buy their share or will you have to sell the house then.

There is nothing like financial stress to kill friendships and they can be ended very swiftly where money is involved but really think very long & hard about this one.

Wesser

My friend did this and she got really trapped as she wanted to move to another part of the country for work and therefore ended up paying both mortgage and rent. The friend had reached a certain age where she simply didn't want to live with strangers anymore and therefore renti ng out her room was not an option. Student days of living with strangers does come to an end and it passes as you get older

al87987

So you're telling me there's a chance...

Okay, thanks everyone for the feedback, responses in general are pretty much what I expected but I have to say I'm still not totally dissuaded by the idea.

The First time buyers thing is one I had not thought of, not an issue for me, but maybe for them.

Could be a really stupid question but if we were to finance this shared purchase without any mortgage/ bank involvement would we still qualify for FTB when we purchased a different home (solo) in a few years with the involvement of a mortgage?

Those two links are great lads thanks.

I am thinking of a 200k house price and if I take 50% ownership with the other two contributing 50k each for 25%. I think this could be done without bank involvement or with minimal involvement after family loans on their parts and I could satisfy the 100k altogether with a (50k) mortgage which would make me the only name on the deed, yes?

All maintenance costs can be split proportionally and I don't mind living with strangers, if the worst happens, or couples for that matter, although whether they'd want to live with me would be different. Beats living at home though or paying rent while trying to save for a house that is only getting further and further out of reach.

All of the reasons not to purchase a house can be pretty much applied to buying with a partner too; job loss, relationship split, negative equity etc...

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bucketybuck

al87987 wrote: »

All of the reasons not to purchase a house can be pretty much applied to buying with a partner too; job loss, relationship split, negative equity etc...

I'd say you were a fool for believing that but you'd only be fooling yourself. Buying a house with a partner is a very different animal to buying with two random mates, for lots of obvious reasons.

It sounds like you want to talk yourself into this and its certainly no skin off my nose whatever you end up doing, but the fact still remains that this would be a horrible risk to take and a very bad idea all round.

Claw Hammer

al87987 wrote: »

Could be a really stupid question but if we were to finance this shared purchase without any mortgage/ bank involvement would we still qualify for FTB when we purchased a different home (solo) in a few years with the involvement of a mortgage?

An FTB is a person who hasn't owned a house or a share in a house before. Mortgages have nothing to do with it.

al87987 wrote: »

I am thinking of a 200k house price and if I take 50% ownership with the other two contributing 50k each for 25%. I think this could be done without bank involvement or with minimal involvement after family loans on their parts and I could satisfy the 100k altogether with a (50k) mortgage which would make me the only name on the deed, yes?

You won't get a mortgage for €50k. The banks aren't interested in such small mortgages. The banks will also enquire if any person other than the borrower has contributed to the equity and if that person expects to share in the equity in the house as a result. Parents, family etc have to say that the money was a gift and they do not wish to have any share in the property asa result of paying towards it.

eeguy

I had the same thought with two of my friends recently.
It seems like a good idea, but once you get to the nitty gritty it falls apart.
IMO, one person needs to be in charge of the house and look after things when they go wrong. One person needs to have authority. The problem is that even if you're the responsible one who makes sure things are maintained and bills paid, you have no authority over the other lads in the house.

Say if something goes wrong and you need 5k to fix the problem, but one lad doesn't have any money. Do you hope he pays his share in future? Do you not fix the problem? Do you tell him to go to the bank or parents for cash? All terrible choices that could ruin a friendship.

People get very weird about money. I've honestly stopped lending to anyone. It's more hassle than it's worth.

Interested Observer

Just on the first time buyers thing, if you buy a house anywhere (including abroad) by any means you are no longer a first time buyer.

If you inherit a house then you still have your FTB status.

PhoenixParker

Claw Hammer wrote: »

An FTB is a person who hasn't owned a house or a share in a house before. Mortgages have nothing to do with it.

This is incorrect. From the point of view of the central bank and the mortgage rules/20% rule what matters is whether or not you've drawn down a mortgage before.

Other schemes may have different definitions and rules and the rules may change so the OP still needs to be wary but mortgages do matter.

boundlessSea

This sounds like a bad idea for the reasons mentioned previously. Another issue might be if one of the occupiers gets support from a partner in paying their part of the mortgage or gets married the other person could get an interest in the home. The legal costs associated with setting up joint ownership could be expensive, and would be even more so if there was any disputes in the future between potential owners.