Homeownership is now one of the hardest goals for our generation to achieve. With property prices soaring above wage growth, and the cost of living continuing to swell, it’s no wonder most of us feel stuck in “generation rent.” But what if there was a different approach to homeownership that cut your mortgage debt in half? Enter mortgage sharing — a concept that’s turning the traditional idea of homeownership on its head and providing a new option for those who don’t want to go it alone.
It’s a bit like this: instead of spending years saving up a staggering deposit for your own place, you partner with another person to go halves. Be it your partner, bestie or sibling, the more you pool your resources the faster you get to the front door. However, as with any large financial decision, there is a lot to consider before committing to a shared mortgage.
So is mortgage sharing the key to your homeownership? Let’s explore.
What Is Mortgage Sharing?
In essence, mortgage sharing is a partnership – a group of two or more people come together to purchase a property and share the deposit amount as well as the monthly mortgage repayments. Being able to do this means you can ultimately take on a financial goal that, in our world today, can feel like a formidable one to tackle on your own.
You can decide how you’ll own together: as joint tenants (usually a 50/50 split, common for couples) or as tenants in common. The latter allows you more flexibility to split ownership however you see fit, which is helpful if one of you is putting more upfront into the venture.
But — yes, there’s always a but — you can’t share a mortgage without some homework. It’s important to consult a financial advisor so you understand all of your options and obligations. They’ll walk you through the borrowing process, help you determine whether your finances are compatible with the other person you want to buy with and ensure that you are headed toward long-term success. Professional guidance isn’t just nice to have — it’s crucial to avoid expensive mistakes.
Who Is Mortgage Sharing Right For?
Mortgage sharing may be the answer for those who believe they’ve been priced out of the property market, or who just can’t seem to get a foot in the door. It’s particularly appealing for first-time buyers who are struggling to save a deposit on their own. Partnering with someone gives you more buying power with the potential to begin the homeownership process earlier. It’s also attractive to millennials and Gen-Z’ers who aren’t looking to get stuck in a rental trap. If you have a close friend or relative in a similar situation, mortgage sharing may be just what you both need.
But it’s not just a question of affordability. Many people treat property as an investment, in which case this approach can be great. Two siblings, for example, could purchase a house together, with one living in it, and the second renting their portion out. In this way, they both benefit from climbing property values without facing the burden of ownership in full.
Getting on the Same Page About Personal Finance
Walk the walk — in terms of mortgage sharing, financial transparency is not only important, but it’s also non-negotiable. So both sides should be clear about what each side wants. What are the financial resources of each person? What is their credit score? What debts lurk in the dark?
That’s where transparency and honest conversations will help a lot. If you can't have these with the person you’re planning to share a mortgage with, it might not be the right fit as it’s important to have these conversations in advance and not to deal with surprises later. You’ll need to agree on practicalities, too, such as how you will pay the deposit and mortgage payments and whether you will cover ongoing costs (maintenance and utilities), and if so, how much.
If you want some added peace of mind then you could always hire a solicitor to draw up a co-ownership agreement. It lays out what part of the property belongs to whom, what happens when someone wants to sell and how to settle disputes. Think of this as your insurance policy — it covers all parties.
The Dangers You Should Be Aware Of
Mortgage sharing can be a godsend — but it carries its own risks. You’re financially entangled with another person and if your co-buyer misses a payment on the mortgage, both of your credit scores could be affected while, of course, putting your home at risk.
There are life’s curve balls to consider, too. What if one of you gets a new job in a different city or wants to start a family, and the other one wants to keep living where you’re living now? Once a solid contingency plan is in place, adjusting to these changes can become a relatively painless process, but it doesn’t eliminate every challenge.
Then there’s the property market itself. While the majority of us believe that house prices rise over time, that is not always the case. You and your co-buyer should absolutely have a conversation about how you’ll both deal with the scenario of the property losing value, or the what’s what if one of you wants to sell before you have enough equity built up.
How To Get Started
If sharing a mortgage seems like the best fit, start with preapproval for a mortgage. That will tell you what you can afford together. Then get to work finding a property that makes sense for everyone — not just what everyone can afford, but what everyone would feel comfortable living in and what has the potential for a decent resale price, too.
Then, get yourself a solicitor who knows about shared ownership. They’ll draft a co-ownership agreement for you and handle all the legal nitty-gritty of your purchase. Though this may seem like an unnecessary expense, it’s one well spent for the security and clarity it offers.
And finally, keep those communication lines open. Mortgage sharing is a partnership, and trust, honesty, and regular check-ins are the foundations of any partnership. Set clear expectations from the get-go to avoid a lot of headaches down the line.
Is Mortgage Sharing Right for You?
Mortgage sharing is not for everyone, but for the right candidates it can be a life-changing path onto the housing ladder. Pooling your resources can make homeownership achievable — and sooner than you may have dreamed about — whether you’re buying with a partner, family member, or a close friend.
That said, it’s not something to jump into. Map it out, do your homework, speak with a financial adviser to ensure you’re making the right decision for your circumstances. Mortgage sharing — when done right — may just unlock the door to your dream home!
