First-time buyer case studies

Buying with friends

Nigel Miller, a 29 year-old training coordinator for the NHS, recently bought a £225,000 house in east London with three friends and a five per cent deposit. He used broker website, sharetobuy.com, to find a mortgage they could all take out together, eventually settling on one from Nationwide. All four parties are individually responsible for paying the mortgage.

"Each person is legally responsible for paying their share of the mortgage and we have a lot of other legally binding arrangements between us. For example, if someone wants to sell their share, they have to offer it to the three remaining people first. If we don't want to buy it, then they can sell to someone else, but we all have to agree that we are happy for that new person to buy in."

Some lenders, such as Britannia, will calculate the amount you can borrow by taking into account three people's incomes, but others will only agree to lend multiples of the two highest incomes. This is the type of mortgage Nigel had to go for.

"Share-to-buy mortgages are quite hard to get and it's also difficult to find a broker who can organise a mortgage for four people, so I'd recommend visiting sharetobuy.com; my broker was extremely helpful," enthuses Nigel.

The only major downside, he says, is organising everyone to get their act together. "It's a complex process and it can take a long time to gather everyone's documents. "It's worked out really well for me though the mortgage repayments are so low that I pay £150 less every month than I did when I was renting."

Nigel's advice:
Buy with people you already know you can live with and make sure your arrangements are legally binding and everyone knows exactly what they are getting into.

Mortgages for professionals

Mortgage lenders recognise that young people in certain professions, such as solicitors, accountants and architects, have solid careers and incomes that are likely to go up. These individuals are classed as low risk and so qualify for 'professional mortgages', usually deals which enable them to borrow up to 110 per cent of the property's value at a lower rate than other similar deals, and also potentially to borrow more funds, based on a higher multiple of their income.

Carl Mifflin, a 27 year-old solicitor from Leicester, bought a £130,000 three-bed semi-detached house with a 100 per cent professional mortgage from Scottish Widows. "I didn't have a five per cent deposit saved up and decided I wanted to get on the ladder, because property prices were going up so quickly," he says.

"The rate on a professional mortgage seemed much more reasonable than other 100 per cent deals, and it allowed me to keep the little bit of savings I had for emergencies. It was also very quick; once I got the mortgage offer, it took just two weeks to complete."

Oliver Price, a 26 year-old accountant, also recently borrowed 95 per cent of the value of a £280,000 flat in south London, which he bought with his girlfriend (who is also an accountant). They took out a professional mortgage from Standard Life.

"The rate on our 95 per cent professional mortgage was comparable to 90 per cent mortgages elsewhere. It meant I could use my savings for all the fees you have to pay nowadays, instead of putting down a big deposit," explains Oliver.

Carl's advice:
There's no need to wait and save up for a deposit before you get on the ladder, especially if you are a professional at the start of your career.

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