Buying With Friends as First-Time Buyers: A Clear Guide to How It Works

With rising property prices and increasing rental costs, more people are exploring group buying as a way to get onto the property ladder. Purchasing a home with one or more friends can make deposits more achievable and share the financial responsibilities, but it also introduces additional considerations around ownership, affordability and lender criteria.

This guide explains how buying with friends first time buyers arrangements work, what lenders look for and how to prepare for a joint application. This article provides general information only and does not offer regulated mortgage advice.

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Why More Friends Are Buying Together

Buying with friends can help first-time buyers:

• Combine deposits
• Increase borrowing power
• Access better properties
• Share monthly mortgage repayments
• Split bills and other household costs

It can be an effective way to purchase sooner rather than waiting to save individually.

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How Joint Mortgages Work When Buying With Friends

A joint mortgage allows two or more people to borrow together. Many lenders allow:

• Up to 2 applicants (standard)
• Up to 4 applicants (selected lenders)

However, even when more than two applicants are allowed, lenders may only use the top two incomes for affordability calculations.

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Types of Joint Ownership

When buying with friends, you will need to choose a legal ownership structure.

1. Joint Tenants

All owners share the property equally.
If one owner passes away, their share automatically transfers to the others.

This option is less common among friends due to equal share requirements.

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2. Tenants in Common

Each person owns a specific share, which can be:

• Equal (e.g., 50/50 or 25/25/25/25)
• Unequal (e.g., 60/40 or 70/20/10)

This is the most flexible structure for friends, allowing contributions to match deposits and income.

Owners can also pass on their share through a will.

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How Deposit Contributions Work

Your deposit can come from:

• Personal savings
• Each friend contributing their own portion
• Family gifts (individual or combined)
• A mix of sources, depending on lender requirements

With tenants in common, your share of the deposit can directly influence the share of the property you legally own.

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How Lenders Assess Buying With Friends

1. Affordability Based on Your Incomes

Most lenders:

• Consider up to 2 incomes in full
• Allow more applicants but use only the strongest incomes

Combined affordability often increases borrowing potential compared to buying alone.

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2. Credit Checks

Every applicant undergoes a full credit check.
Lenders look at:

• Payment history
• Defaults and CCJs
• Debt levels
• Credit utilisation
• Financial associations

One applicant’s adverse credit can affect the whole application and may limit lender options.

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3. Employment and Income Stability

Lenders review:

• Payslips or SA302s
• Contract type and length
• Self-employed trading history
• Overtime, commission or bonus patterns

Consistency helps improve lender confidence.

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4. Bank Statement Conduct

All applicants must provide statements showing:

• Responsible spending
• No unarranged overdraft use
• Bills paid on time
• Stable incoming income

Underwriters assess all accounts when determining risk.

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5. Existing Commitments

Commitments such as loans, credit cards, car finance and childcare costs impact affordability.

If one applicant has high commitments, borrowing capacity may be reduced.

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Advantages of Buying With Friends

1. Larger Deposit

Pooling resources can:

• Increase your deposit
• Unlock better interest rates
• Reduce loan-to-value (LTV)
• Improve lender flexibility

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2. Higher Borrowing Power

Using combined incomes often means you can borrow more than when applying alone.

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3. Shared Monthly Costs

Mortgage payments, utilities, insurance and Council Tax can all be divided among the group.

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4. Entry Into Property Ownership Sooner

Group buying can allow first-time buyers to move forward without waiting years to save individually.

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Risks and Considerations Before Buying Together

1. Legal Responsibilities

Everyone named on the mortgage is jointly and severally liable.
This means if one person stops paying, the others become responsible for the full payment.

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2. Different Long-Term Plans

Friends may want to:

• Move out
• Sell their share
• Relocate for work
• Start a family

Clear agreements are essential.

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3. Potential Relationship Strain

Money and property decisions can create tension if expectations differ.

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4. Unequal Contributions

If one person contributes more towards the deposit or bills, you will need a legal agreement outlining ownership shares.

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Legal Protection When Buying With Friends

Most buyers choose to arrange:

1. Deed of Trust (Declaration of Trust)

This document formally records:

• How the property is owned
• Each person’s share
• Deposit contributions
• What happens if someone wants to sell
• How profits or losses are split

This is one of the most important protections for group buyers.

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2. Cohabitation Agreement

Defines how the household will be run, including:

• Bills
• Repairs
• Dispute resolution
• Exit procedures

Solicitors can provide guidance on drafting these documents.

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What Happens if One Person Wants to Leave?

Options typically include:

• Selling the property
• One or more buyers purchasing the leaving friend’s share
• Remortgaging to remove them from the mortgage
• Agreeing on how much equity they are entitled to

A clear legal agreement puts this process in writing from the start.

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Common Scenarios for First-Time Buyers Purchasing Together

Scenario 1: Two friends with strong incomes

Often straightforward with most lenders.

Scenario 2: Three friends but only two strong incomes

Most lenders will assess affordability on the top two earners.

Scenario 3: One friend with adverse credit

May reduce lender choice; specialist lenders may still consider the application.

Scenario 4: Unequal contributions

Tenants in common with a Deed of Trust is typically suitable.

Scenario 5: One person wants to move out early

A clear exit agreement helps avoid disputes.

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How to Strengthen a Group Application

(General Information Only)

Many first-time buyers purchasing with friends choose to:

1. Keep finances tidy

Avoid unarranged overdrafts and maintain consistent bank conduct.

2. Check credit reports early

All applicants benefit from reviewing their files across all agencies.

3. Save consistently

Lenders often look favourably on regular savings patterns.

4. Reduce unsecured debt

Improves affordability calculations.

5. Prepare documentation early

This includes payslips, tax returns, bank statements and deposit evidence.

6. Agree on legal terms before applying

A Deed of Trust provides clarity and protection.

These are general considerations only.

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Summary

Buying with friends can be a practical and achievable option for first-time buyers. A buying with friends first time buyers mortgage application generally involves:

• Joint affordability checks
• Full credit assessments
• Choosing between joint tenants or tenants in common
• Providing clear deposit evidence
• Setting legal agreements for protection

With good communication, strong documentation and clear expectations, group buying can help first-time buyers secure a property sooner and share financial responsibilities effectively.

This article provides general information only. For personalised guidance, regulated mortgage advice is required.