Friends who couldn't get a mortgage on their own clubbed together to buy £280k two-bed house in OxfordFebruary 14, 2019
TWO first-time buyers who believed they had no hope of ever becoming homeowners pooled their funds together and now own a £280,000 two-bed house in Oxford.
Mates Toby Hambly, 25, and Sam Bennett, 26, got the keys to their first home in January this year after putting down an £11,000 deposit.
Depressing stats show that it takes single first-time buyers a decade to get on the property ladder, so rather than wait to find the perfect partner the lads clubbed together to make their homeownership dreams a reality.
Until January, Sam had been paying around £600 a month renting a room in a shared house, while Toby was living at home with his dad working to pay off previous debts.
At first, they'd hoped to rent somewhere but after looking into the Government's shared ownership scheme they realised buying their own place was actually a possibility.
The programme lets buyers purchase between 25 per cent and 75 per cent of the property while a housing association pays for the rest.
This slashes the size of your deposit because the mortgage will be smaller – but the pay off is that you'll need to pay rent on the portion of the property you don't own.
Sam and Toby, both journalists, own 40 per cent of the house, splitting the £400 a month mortgage bill between the two of them. They also pay another £400 a month in rent.
It's recommended that friends purchasing property together buy as "tenants in common" rather than "joint tenants" which means that their share of the house can pass to their next of kin if anything was to happen to them – something the lads have done.
The pals, who live in Didcott, only moved into their home two weeks ago but we caught up with them for the My First Home series.
What's your house like?
Sam: We bought a two-bed terrace house in Didcott outside of Oxford, which was built last year and we're the first people to live in it.
There are two double bedrooms, which was important for us because both of us would be owning the property we didn't want one of us to feel like we'd got the rough end of the deal.
It's got a small garden and a shed out the back. The living room is open plan with a separate kitchen.
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It's dead modern too – all of the plugs in the kitchen have USB ports in them which is really useful for us.
It's basically a two-up two-down. We only moved in two weeks ago so we're still just unpacking and getting settled.
Buying with mates: what you need to know
The process is the same – Lenders don't look at a couple who are partners or who are friends any differently – you'll still have to pass all the affordability checks to get a mortgage. Most lenders will let four people be registered as a owner of a property.
Be a "tenant in common" – This means you and your friend can own a different share of the property, and won't automatically inherit the property if the other person dies.
Think about a "deed of trust" – You might think that you're both happy with what you're agreeing to – but circumstances change. A deed of trust lays out all your responsibilities, as well as how much you contributed to the property, and what will happen if either party wants to sell up before an agreed period.
Let's talk finances. How does it work buying with a friend?
Sam: We decided to go down the shared ownership route so we've bought 40 per cent of the property, while Aster housing association owns the rest.
The house was valued at £280,000 and the housing association paid £168,000 for their share. Our share was worth £112,000.
We were really lucky because my parents gave us £11,000 for the deposit so we could buy our own place sooner than we could have hoped for, and stop bleeding money on renting a room.
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We took out a mortgage for £101,000 so that must mean our deposit worked out at about 10 per cent.
Because the deposit came from my parents, we had a legal agreement drawn up saying that the share is split between us, 60 per cent in my favour.
We pay £400 a month between us for the mortgage repayment and another £400 for the rent to the housing association.
Why did you decide to buy a place together?
Sam: We've known each other for two years now. We met in the pub through a mutual friend and we've also been working together for about a year.
I was paying about £600 a month renting a room in a shared house in the centre of Oxford and I'd been looking into doing the shared ownership thing on my own.
I was a bit nervous about it because buying on my own meant that I would only be able to take out a smaller mortgage and buy a much smaller place.
Plus, I'd have to foot the bills on my own and I'd only be able to buy an even smaller portion of the property.
I'm single and wasn't going to wait around for someone I'm seeing to buy a place with – so I asked Toby.
Toby: I had been renting a place on my own, but at £1,000 a month it was too expensive so I decided to move back home with my dad in 2017.
The pair have only just got the keys to their home and are still unpacking boxes
But when Sam asked me if I wanted to buy a property with him I leaped at the opportunity.
We get on really well but it also it meant that I could move out of my dad's house and start putting money towards my own mortgage.
I've still got some of the debts left to pay off but I make the minimum payments every month.
Was it hard to get a mortgage?
Sam: We had a bit of a false start actually – back in October we were rejected for a mortgage because both of us had bad credit ratings.
We had a mortgage adviser who told us to go away to try and build up our scores and come back again in six months.
It was heart-breaking because the thought of having to continue paying expensive rent for another half a year was too much for me. I was really ready to give up.
Toby: We actually ended up going with another adviser who didn't think we needed to build up our scores and within four weeks, we had a mortgage.
We made an offer on the house in December and we got the keys in January. It all happened so quickly in the end.
What are you going to do when it comes to selling the place?
Sam: To be honest, we've only just got the keys so we haven't even thought about selling it yet. We'll cross that bridge when we come to I guess.
With shared ownership you can work towards owning 100 per cent of it which is a possibility but we'll just wait and see if we can afford to in the future.
Did you split buying the furniture 50/50 too?
Sam: To be honest, we've managed to furnish the house mostly with secondhand goods.
What help is out there for first-time buyers?
Help to Buy Isa – It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan – The Government will lend you up to 20 per cent of the home's value – or 40 per cent in London – after you've put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you're restricted to specific ones.
"First dibs" in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.
We both had a few bits and pieces from when we rented and topped them up with a few bits from Facebook Marketplace, like our dining room table and chairs which cost us £70.
We've probably spent about £500 on white goods too which we just split between us.
Would you recommend buying with a friend?
Sam: Definitely. I mean, it's only early days but we get on really well – we both enjoy each other's company but also respect our need for privacy.
At first we were thinking about renting together but shared ownership has worked out cheaper for us and we've got a mortgage.
It's an amazing feeling to achieve this all with your friend.
Toby: It made the whole process of finding somewhere to live and getting a mortgage easier doing it with my friend.
Sam's much more on it when it comes to getting things done – I'm a bit lazy when it comes to the paperwork.
But I'm way more practical so it's up to me to build the furniture around the house.
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