Buyers band together to afford first mortgage

Group mortgages are growing in popularity, as first-time buyers are forced to club together in order to afford their first home.

Several lenders have seen substantial increases in the number of borrowers in search of group home loans. HSBC, for instance, recently reported a 50 per cent rise in group applications.

A mortgage contract can contain up to four names and the majority of leading high street lenders will offer their full range of home loans to friends buying together.

Several providers, including Britannia and Skipton building societies, offer specialised mortgage products that specifically cater for joint investors, which consider the incomes of up to four borrowers.

Non-specialised lenders will tend to only consider the credit histories and incomes of up to two borrowers, despite allowing four-way deals, observes independent mortgage adviser Ray Boulger of brokerage firm John Charcol.

"Friends buying together should choose short-term mortgage deals, such as two-year fixed-rates, or ideally deals with no early repayment penalties," he told the Mail on Sunday.

"This way, if one friend does want to leave or the property has to be sold, there won't be extra costs incurred," he added.

Trust in your co-homeowners is essential when entering into a group contract, since joint and several liability clauses in your contract dictate that each borrower takes equal responsibility for repayments.