First time buyers are throwing caution to the wind and rushing onto the property ladder with people they barely know, unaware of the potential consequences should things go awry.
First time buyers are throwing caution to the wind and rushing onto the property ladder with people they barely know, unaware of the potential consequences should things go awry.
Research by Skipton Building Society has revealed that one in five first time buyers who have taken out a mortgage with someone other than a spouse has done so with a person they have known for less than a year.
Rising house prices and a tight budget appear to be the primary drive forcing people to take this leap of financial faith. The majority of people (56%) who took out a mortgage with a relative stranger said they did it because the arrangement made financial sense, with a quarter stating they were unable to buy alone.
More than a fifth (22%) described themselves as `desperate to get on the property ladder' - indeed a quarter of co-mortgagers are so desperate they are willing to buy a property with somebody they had never previously lived with.
However, when things go wrong, the price of falling out with your mortgage partner can be extremely high. A quarter of mortgages which came to a premature end were because the borrowers split up or fell out. This left nearly one in 10 people (9%) completely out of pocket, with 16% only receiving their share of the property's original value, even if it had gone up in price.
The emotional cost is just as significant. Over a third (39%) of buyers whose joint mortgage ended felt that they had made the decision too prematurely. Hindsight it seems is a wonderful thing, as more than a quarter (28%) said that they should have spent more time getting to know the person, with a quarter expressing that they should have lived with the person before tying themselves to such a big financial commitment.
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