Could a shared mortgage be the way to buy your first house?

High prices have put mortgages out of reach for many single first-time buyers, forcing them to look for new ways to get onto the property ladder. Here Andrew Boast, co-founder of Shareamortgage.com, talks about why sharing a mortgage with someone else could be a good option.

The sharing of assets or collaborative buying is nothing new and the principle is fairly simple – pool resources and share an opportunity that would otherwise be unavailable or unsustainable. There are some great examples where this principle has been applied and provided real benefit to the collaborators, such as car sharing or holiday home rentals.

The sharing economy has opened up many opportunities for consumers with numerous businesses building their offering around facilitating co-ownership including SoundCloud (sharing your music), Borrow my Doggy (sharing your pet) and Streetbank (sharing with your neighbour). Peer-to-peer lending has also come to prominence in the last few years within the same vein, with mutually beneficial lending and borrowing taking place between people and people, and people and businesses.

Making the case for the housing market

When something is shared it means that more people are able to benefit and if applied to the right areas, it can have huge financial advantages putting some things in reach which might otherwise not be affordable. Buying a house is a pertinent example, due to a number of factors. The number of people living in the UK has broken the 64 million barrier this year, after one of the biggest population increases in the whole of Europe[1]. This is putting a huge strain on the amount of available housing.

As house prices have increased, the percentage of people renting their home has also risen across England and Wales in the decade to 2011 according to the most recent census. London had the highest percentage of renters, accounting for over half of the households in the region (50.4 per cent).

The perfect candidate

With statistics showing that people are prepared to rent with others to pay off someone else’s mortgage, why are they not joining forces to buy a home together and pay off their own mortgage? The combination of rising property prices and homes being in short supply makes the housing market a perfect candidate to benefit from the sharing economy.

Buying a house is one of the biggest financial outlays that someone will ever make – making it quite a scary prospect for many and a simply unachievable goal for others. The thought of sharing a mortgage with someone other than a partner or husband/wife also strikes fear into many but could be the key to being able to get a foot on the property ladder.

The collaborative power of two (or more) buyers, salaries and sets of savings, opens up far more opportunities than one home buyer would be able to achieve alone. By sharing the cost, consumers can not only increase their buying power but also create a sustainable solution to the housing crisis by reducing their individual demands for housing. With eight million properties in England under-occupied and a market screaming out for more houses, the sharing economy presents the perfect solution to this strain on resources. 

Taking the plunge

The sharing economy is becoming the standard for a growing community, creating a forged alliance of trust between consumers. The housing market is starting to follow this trend with a new way of buying homes – collaboratively – to combat both a shortage of property and unaffordable prices.

With the practice becoming more commonplace and indeed viable, potential buyers should not be put off taking the plunge. Legal advice and protection exists for buyers entering into a shared mortgage option, to provide support and peace of mind when buying with others, helping turn their housing dream into reality.