Rocketing property values have priced most young, single people out of the housing market. But now they can get a foot on the property ladder by clubbing together to get a mortgage.

 

With property prices growing by 11% in the past year and the average asking price for a home standing at £218,954, first-time buyers are struggling more than ever.

Clubbing together to buy property with friends is an increasingly popular way round the problem. HSBC bank says it has seen a 50% rise in applications for group mortgages.

Earlier this month Britannia Building Society relaunched Share to Buy, which offers a full mortgage and legal advice service for group purchases.

Legally, up to four adults can be named on a mortgage contract. The majority of lenders, including High Street names such as Abbey, HSBC, Nationwide, Halifax and NatWest, offer their full mortgage range to up to four friends buying together.

Some lenders, such as Britannia, offer special deals. Britannia's Share to Buy mortgage, available to graduatesand young professionals, is a tracker loan at 5.6% - 0.85 points above the base rate.

Ray Boulger, independent mortgage adviser at broker John Charcol in London, says most lenders will take only two incomes into account when calculating affordability, though if there are more people in the purchase all names appear on the mortgage and all borrowers are owners of the property.

Britannia and Skipton building societies are among lenders that will take account of four incomes.

The most important aspect of a joint mortgage is that it is offered on a 'joint and several liability' basis. This means that all the borrowers are equally liable for repayments on the mortgage

If one borrower stops payments for some reason, the remaining borrowers are responsible for the shortfall. It is also vital to draw up contracts and set down rules among the group to avoid problems.

If one person decides to move out but wishes to keep their share in the property they will usually be allowed to let their room.