BEST friends Amy King and Alice Ward would never have guessed when they first met at school 15 years ago that they would end up owning house together.
Police constable Amy, 28, and Alice, 29, a general manager at a wine bar, went from sharing classrooms to buying a £505,000 two-bed flat in Walthamstow, London.
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The two pals each have a 50% stake in the property and decided to buy a house together at the end of 2020 after realising they couldn’t afford to buy alone.
After falling in love with the flat, they split the £43,000 deposit between them both, paying £21,500 each.
The pair were lucky enough to have the money in place already without having to save up for their home.
Amy’s deposit was mostly covered by inheritance left by her grandparents, while Alice’s was covered by a £17,000 redundancy package she got from a previous job in hospitality.
They took out a mortgage of £260,000, and both pay £420 in repayments each month.
That’s far less than what Amy was paying in rent for her house share, which was £940 a month.
While Alice lived with her sister and paid £300 a month.
They couldn’t have afforded their flat without taking out a £202,000 Help to Buy loan.
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Under the Help to Buy scheme, the government will lend you up to 20% of the value of your property – or 40% if you live in London.
They moved into their home in December last year.
Quilter mortgage expert Karen Noye said that it’s no surprise friends are joining forces to buy a house together amid a cost of living crisis and “sky high” house prices.
But budding buyers should be wary of potential complications.
“If one party can’t buy the other party out then the mortgage will have to continue in both names or they would have to sell the whole property outright,” she said.
“Already being named on a mortgage will have an impact on them financially especially if they wanted to buy again.”
Ms Noye added you should draw up a formal agreement with a solicitor called a cohabitation agreement.
“This would cover what share of the property each party owns, the dispute resolution process, maintenance costs and of course who is financially responsible for what.
“This can be incredibly worthwhile as can avoid future arguments if it’s all down in black and white.”
Money.co.uk senior personal finance editor said while it might seem like a good idea now, it “might well not in five years’ time”.
That’s because personal circumstances can change – so both agree on a rough date you would discuss selling up before signing anything.
He added: “Only buy a property with someone you know very well and who you trust entirely.”
We took a snoop around their house for The Sun’s My First Home series.
Tell me about your home
It’s a two-bed flat in Walthamstow, built by Countryside Properties.
We live in a six storey block, and we are on the second floor.
There are two bathrooms, one for each of us.
We have an open plan kitchen and dining area.
The flat also has a balcony – we don’t get a lot of sun on it, but it’s great for getting fresh air in the flat.
How did you decide on location?
We have always liked east London, so made a bee-line for this location.
The flat is close to Wood Street station – we can get into central London in just over 20 minutes so the commute isn’t bad at all for both of us.
We saw the property on Rightmove and when we went to view it, we liked the green spaces, pubs and coffee shops around the local area.
How much did you pay for it?
The flat was £505,000.
We both paid a £21,500 deposit, as it was £43,000 in total.
We took out a £202,000 Help to Buy loan as well.
It’s interest-free for the first five years.
Taking out a Help to Buy loan meant we didn’t need to take out as big a mortgage as we needed to.
We jointly applied for a £260,000 mortgage over a 35-year term, at a two-year fixed rate interest period of 1.34%.
Why did you decide to buy together and how did you do it?
Me and Alice have known each other for around 15 years. We met at school and have been friends ever since.
We both had a chat about buying a property together at the end of 2020.
It made sense for us, because we’re such old friends and we’ve already lived with each other previously for a year and a half.
We are both single, and while we both wanted to buy a home of our own, we couldn’t afford to do it alone.
My step-mum is a mortgage advisor and helped us initially weigh up whether we should pool our money together to buy a place of our own, and we decided to go for it.
We each own a 50% share in the house and have applied to the Land Registry for a Tenants in Common agreement.
This agreement means I legally own my part, and Alice’s owns hers – and it gives us legal protection.
For example, if I lost my job, it doesn’t fall to Alice to stump up for my mortgage repayments. This falls to the person I’ve listed as next in line, which is my mum.
Under the terms of the Help to Buy contract we signed, we can’t sell our own share of the house if one of us wants to leave – either we both live here, or we have to sell up.
We’ve both said that when our fixed-term mortgage agreement is up – which is after two years – we’ll look to see if we want to keep living here.
But we won’t be staying here after five years – that’s because we don’t want to be paying the interest on top of our Help to Buy loan.
How did you save for it?
We were both lucky enough to have the finances already in place to buy the flat.
My inheritance covered pretty much all of the deposit. My grandparents left me £20,000.
But I still needed enough cash for the remaining £1,500 for the deposit, and wanted to have enough cash in my bank to cover expenses solicitors fees and furniture.
I raised £5,000 for this, and cut down on my outgoings in the following ways.
Switching jobs from being a recruiter to working in the police force helped me save on travel costs.
That’s because I get to travel for free on Transport for London services – I save around £220 a month, which works out as £2,640 a year.
I also cut down on going out as well. I would spend around £700 on meals, drinks and nights out, but cut that down to around £400 by inviting friends over for dinner instead.
I used to spend £200 a month on clothes, but while I was saving, cut this down to £50.
Meanwhile, Alice received a £17,000 redundancy package from a previous employer, which made up most of her deposit.
She had worked for a private members club for six years, and was made redundant in 2020.
Her family gifted her £4,500, which covered the rest of the deposit needed with some extra cash leftover for fees.
Alice is saving up for furniture as she goes along.
How are you furnishing it?
We are both splitting the cost of essential furniture equally between us.
But if one of us really wants something that’s not essential, like a drinks trolley for example, they’ll pay for it alone.
We spend a lot of our evenings searching online for bits that we want.
Some of the furniture was given to us, which helped us save money.
Our friend gave us a sofa, and my step dad built a table and dining chair set for us.
What advice would you give to other first time buyers?
If you’re buying with a friend, make sure you’ve lived with them before.
You want to make sure that you can talk any issues out with each other openly, and that you’re on a similar wave length.
Me and Alice are both laid back – it means that we can send a message or talk about anything without any drama.
Set up a Whatsapp group specifically for any house business.
It means we can keep our friendship separate from anything to do with owning the flat together.
Make sure you treat it like a proper investment deal between the both of you.
It’s a lot of money to spend – so make sure you do your research and get good mortgage advice to make sure you are both financially protected.
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This post first appeared on thesun.co.uk
