A new company called Shareamortgage.com claims it provides “a safe and affordable way to buy a home with other people” as part of the growing 'sharing economy'.
As well as acting as a dating agency to pair up homebuyers looking for a “mortgage buddy”, Shareamortgage.com also offers advice to parents helping their child buy a home and buy-to-let landlords looking for a joint investor.
For potential first-time buyers struggling to afford their own home due to high house prices, pooling their deposit and salary with someone else bolsters their buying power. This means they will be able to buy a better property than they would alone, or it could mean the difference between buying and not being able to buy at all.
Once the property’s purchased, owning it with someone else means splitting the bills and other ongoing costs.
Shareamortgage.com plays host to a "community” where you can find a buying partner or partners. It even suggests couples buddy up with another couple and co-buy with them.
When you’ve found someone, or a group, and agreed to buy a property with them the site offers a specially designed legal document called the Shared Ownership Protection to protect joint owners. It details how to share the mortgage and other costs, mechanisms to leave the property, house rules and what happens if someone stops paying.
What if it all goes wrong?
Couples, friends and family have been pooling their resources to buy property for years. But is buying jointly with strangers a good idea?
Potential issues include living happily in the property together: what happens if you simply don’t get on?
Other issues might occur if one buyer loses their job, doesn’t pay their share of the mortgage, breaks the house rules (agreed on at the outset), or wants their boyfriend or girlfriend to move in.
Obviously all these things can also happen when strangers rent together, but a tenancy agreement is usually easier to bring to an end than a mortgage.
Why it might be a good idea
Although the idea of meeting someone via the internet and buying a house with them might sound bonkers, it has its plus points.
For many, especially single buyers, finding someone to pool their resources with could mean the difference between getting on the property ladder or not.
With tenants increasingly unhappy with everything from rent levels to landlords evicting them willy-nilly, co-buying could mark their escape from the rental market. If house prices continue to rise it could also mean that the property could be sold at a profit in a few years’ time, leaving both parties with enough cash to buy a place on their own.
Crucially the Shared Ownership Protection document sets out what will happen if one party wants to bring the arrangement to an end.
Call me a cynic but this issue is one that property-buying couples often forget to discuss when buying together. In the first flushes of love, many naively don’t discuss who’ll get what and live where in the event of a break-up. When the split happens discussions about money are often driven by bitterness, rejection and resentment. Not ideal.
In short, having an agreement at the outset which assumes and accepts that two or more parties will eventually be going their separate ways – and makes plans for certain eventualities – sounds like quite a good plan to me.
As well as pairing up or grouping first-timer buyers, shareamortgage.com also provides a platform for would-be landlords to find other buy-to-let investors.
Buy-to-let mortgages generally require a bigger deposit than residential mortgages and the bigger deposit you have, in general the cheaper the mortgage rate will be.
In theory this will mean a better yield or return on your investment – but remember you’ll be splitting the profits with someone else too.
There are other ways to get involved with buy-to-let without buying a property on your own, including peer-to-peer lending and crowdfunding.