How to get on the housing ladder - going clubbing for a mortgage

With sky-high property prices and thousands of first time buyers struggling to get a foot on the housing ladder, clubbing together with friends is becoming a popular way around the problem of buying a home. New research from Abbey reveals that 17.3 million adults are not able to buy a property, with 7.4 million people citing rocketing house prices as one of the main reasons. Group mortgages typically allow up to four people to buy together, and take everyone's incomes into account when calculating how much they can borrow. They might be former school friends, a group of work mates, or siblings.

Britannia Building Society has teamed up with specialist intermediary Graduate Network to offer buyers an expert training hand in purchasing their first property. In October they re-launched "Share to Buy", which offers a full mortgage and legal service for group purchases. .

"Many graduates and young professionals have built up sizable debts as students, but even with a city income these young people are struggling to purchase a home," says Tim Franklin, managing director of Britannia's Member Business, "With many people feeling that rent to a landlord is down the drain, it is becoming more acceptable for friends to club together in order to purchase a property."

Stephen Dwelley, managing director of Graduate Network, says, "Not only are we offering a salary multiple that can significantly boost the affordability of first time buyers but also our free legal agreement provides a sound basis upon which friends can buy property together, covering the important concerns such as what happens if one on them decides to move out. Overall we aim to offer an acceptable way in which young professionals can get a stake in the property market at an earlier age than is currently possible."

Group mortgages grow in popularity

HSBC says it has seen a 50% rise in group mortgage applications this year. Britannia and Skipton Building societies offer specialist mortgages and will lend up to three times each of up to four salaries. Britannia's Share to Buy Mortgage is a tracker loan at 5.6% - 0.85 points above the base rate.

Others prepared to lend in this way include HSBC, Abbey, and Halifax. They offer their full range of fixed-rate, variable rate and tracker mortgages to groups of buyers although not all will lend to the same level. Halifax will take account of just two salaries out of a maximum of four.

20 November 2006 © Moneyextra.com

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