Buying a house with friends: The pros and cons
Every culture in human world changes with time. Home is one of the most critical needs for us and to buy it. One needs to have all the proper arrangements. Nowadays, people buy a home in partnership with their friends; previously, it was possible with an only partner (husband/wife).
Buying a home with a friend brings varied facets that throw light on the pros and cons of buying a home with your pal.
It is always better to get the good news first. Here are the pros of buying a roof for cohabitation with a friend.
Qualify easily for the mortgage
When you apply for a mortgage with a friend, it is easy to be strong in your mortgage application. The joint financial efficiency to repay the loan works well to get you a comfortable and smooth approval from the lender. If one of you has a bad credit score and the other has a good credit rating, the strength of the letter one can compensate for the weakness of the weaker credit score performance. An individual applicant has to face an intense struggle on the qualification criteria; however, with two people working for the same purpose, it is easy to attain a common task.
The bigger size of home equity
Home equity describes the difference between the value of a home and the money you owe to the lender. If you stay with your friend for a long time and make the payments jointly, you both attain a better status in home equity.
While separating ways with your friend, you can both sell the home and can use the obtained money for the down payment of your houses. The better equity earned while living with your pal helps in buying a new house. With increased creditworthiness getting a mortgage loan from broker like Shinemortgages.co.uk in the future becomes easy.
Considerable deduction of interest from taxes
The interest of buying a home with a friend facilitates a significant amount of reduction from taxes which in turn saves your precious money. How much you can deduct from the tax depends on the percentage you own in the property. It is a massive benefit for anyone who invests money in property. Those with a high income can see the enormous and positive impact on their financial conditions.
Now is the turn of the cons that express the negative sides of buying a house with a friend.
Co-buying is not a long-term option
It is undoubtedly attractive to share your mortgage application with your friend. But when you move in, both of you may have different plans. Maybe you want to stay in the same house for a long time, but your friend has a separate concern and wants to move on with her or his partner to a new place. The other person may want to sell the house. In such situations, you may have to drag yourself with the present conditions unnecessarily. Several classes may rise and leave you uncertain about the future.
Threat on credit score
If anyone of you fails to keep the right pace with the mortgage instalments, it can be harmful to the credit score of the other person. Irrespective of you are paying your share on time, the lender is going to report to the credit reference agencies about the delayed payment. It affects the credit score of both the loan holders. At that time, it doesn’t matter who is at fault and who is punctual in the repayments.
What if anyone of you loses the job?
Anyone of you may have to bear the burden in case of job loss. If anyone of you loses his or her job, the other one has to take the birth of the hefty mortgage instalments. Until things get normal whether you like it or not, it will be vital for you to make the mortgage repayments. Such circumstances leave no choice, as delay in payments will affect the finances of both the homeowners.
The above accumulation of pros and cons are perhaps sufficient to help you make a rational decision that if you want to buy a house with your friend or not. Something is positive not something is negative about this situation, but the most important thing is to be mentally prepared adequately. Take your time; don’t decide in haste, as regret is always pathetic. Consider all the sides before you reach a final decision. All the best!!