5 students buying a house......can it work?

[Sandra6]

How do students even get a mortgage in the first place?
I don't think it's sensible for the same reasons as have already been mentioned by others. I wouldn't support a child of mine in such a move either.
I don't see the need for them to own a property for the short amount of time they'll be living in that part of the country anyway.

 

[Heltor Chasca]

Mortgage applications are a strange animal. Years ago, when I remortgaged my house, I applied to have the ex included when we were still married. They took one look at her abysmal credit score and suggested I forget her inclusion as a very bad idea. With her name, the mortgage was rejected, but with my name alone, there were no issues.

Therefore I am curious as to how the mortgage will be approved in the first place.

 

[Vapin' Joe]

It's a nightmare waiting to happen

1) Contribution to upkeep of the property, particularly if one person causes some damage
2) One purchaser quits study and wants their share of the capital back - can't sell a 1/5 share easily
3) One purchaser fails to keep up with mortgage payments

If one of my kids came up with this crackpot plan I'd tell him to forget it.

I'd run a mile from it too. So much that could go wrong.

 

[spen666]

That's what a good lawyer will advise on - how issues like that should be addressed and written into any agreement.

Property is usually held on a trust for sale, so in theory student wanting out could force sale of house.

The practical reality of that is another matter

 

[Tin Pot]

It can be done.
I did it back in 1980
I now own >1 property

BUT.

You need to go in eyes wide open.
You need guarantors (Bank of Mum & Dad) for all costs and expenses
Buyers need to budget for replacement of fixtures and fittings (say £2k PA), so the monthly payment must be higher than the mortgage.
Buyers need to realise that if they leave, then the house boss will find the new replacement (afterall they have to live with them) but the owners remain ultimatly responsible for the payments.
There needs to be an agreed exit strategy from the outset. Such as an agreed option to sell on given dates (say every 3-5 years)
If after say 5 years only one person wants to sell then they MUST have the option. The others can buy their option, or everyone sells.
The only way this will work is Socalist Benign Dictatorship.
One resident has to be the boss and sort out the money, the rota's, and makes the decision on the coulor (and cost) of the living room carpet etc.
All must be agreed, on paper, before you kick off.


In my case it was a 25% split.
One person never moved in, so in effect became a silent partner and was happy with that (as house prices were shooting up)
One person moved in a year late.
One person moved out after 3 years.
This meant that we always had owner and non-owner occupants, we charged everyone the same, and everyone had a hand in the same decisions
I sorted out all the money.
Even after I moved out (and left 1 owner and 3 tennants behind) I was still the one to make all the decisions and sorted the money and in effect became an Absentee Landlord, which was a situation that suited everyone.
We then rented the house out for a number of years after which I then bought out each of the partners, (which then started me on the path of buying other properties, but that is a different story .......)

And did anyone ever fall out with you?

Were there ever any problems, financial or otherwise?

 

[slowmotion]

I bought a house jointly with a friend in 1983 ( I think). We lived in it for three years before I wanted to get married and get out. From the outset, we had a cast iron legal agreement about what should happen if either party wanted to move. We would get valuations from three local estate agents and pick the middle figure. That was to be regarded as the notional value. The party who wanted to stay would have to come up with his share in order to buy the leaver out. If he couldn't, we would both sell up. It worked well and we are still very good friends.

Trying to do something similar with five people seems a bit unfeasible to me.

 

[Brains]

And did anyone ever fall out with you?

Were there ever any problems, financial or otherwise?

Living in close proximity for 7 years with between 3 and 7 early 20 somethings there will invaribly be issues.
Luckly no one that mattered ever stormed out saying they never wanted to see us again, but there were a number of issues, some of which can be read in a couple of books written by people who were residents at the time.

We also strongly belive that the 'Young Ones' was written partially based on our household, certainly most of our friends at the time assumed we had done a deal with the writers. However, Ben Elton, who we vaguegly knew though friends of friends always denied it, but maybe he heard the stories and built it from there.

Money, was always too tight to mention, but we got by.
Only one tenant in ten years ever stiffed us.