Buying a Home Together
Get an easier route into the housing market by buying a home with a friend, sibling or partner.
Have you considered buying a home with a friend?
Many first-time buyers enter the housing market by purchasing together with a friend, partner or sibling. A home is a major investment, and having multiple people involved in the purchase can make it easier to transition from renting to owning. You will typically have more than one income to base the loan offer on and greater equity to use for the home purchase.
Regardless of who you choose to buy a home with, the entire home buying journey – from pre-qualification letter to housewarming party – is the same.
How much can we buy for?
The very first thing you should find out is how much you can buy a home for. To do this, you apply for a pre-qualification letter. With a pre-qualification letter, you are not locked into taking the home loan you apply for. It is only a confirmation of how much you can buy a home for.
A pre-qualification letter is important to have ready before you start attending property viewings and participating in bidding rounds. Then you know which properties you should attend viewings for, and are ready to submit a bid when the bidding round opens quite quickly after the property's final viewing has taken place.
How much equity do I need?
The main rule for equity is 10% of the purchase price plus costs.
If you do not have enough equity, it is still possible to consider other solutions. Our advisers are happy to help you.
Advisers for young home buyers
Unsure what's required to get a mortgage? Have a chat with one of our advisers for young home buyers.
Checklist property viewing
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Three tips for those buying a home together
Write a cohabitation agreement
Have a clear exit strategy
Have a plan for both personal and joint finances
1. Write a cohabitation agreement
Do not hesitate to write a cohabitation agreement out of fear that it will create a bad atmosphere. Even best friends disagree, and without such an agreement, a bad atmosphere is precisely what can quickly result.
A cohabitation agreement states how you must arrange the finances between you.
Co-ownership Agreement for Friends
DNB has, in partnership with the law firm Ally, created a co-ownership agreement for friends. Here you can also receive a free advisory consultation and take a free test to see if you are suited to buying a home together.
2. Make sure you choose the right cohabitant – and have an exit strategy in place regardless
Regardless of who you buy a property with, it is important to choose the right partner. Buying a property is a major investment with many obligations. Therefore, it is an advantage to choose a cohabitant you trust and know well.
It is wise to have a plan for sale – a so-called exit strategy. Friends who buy a property together usually have a limited time horizon for the cohabitation. Therefore, it is particularly important to have clear agreements for purchase, use and sale.
Create a written agreement on how you will resolve matters when the property must be sold. Distribution of costs and income from the sale is a must, but it may also be wise to determine how far in advance the person who wants to move out must give notice. Perhaps you must also have decided what is required to buy each other out of the property, should one of you wish to remain living there alone?
As cohabitants, you should consider:
- How you wish to live together on a daily basis?
- Whether parts of the property must be let out?
- For friends living together: What happens if one gets a partner?
- What happens if someone wants to exit the agreement earlier than expected?
- How should you handle it when the property is sold?
- What if someone becomes ill, loses their job or cannot pay expenses?
3. Individual and joint finances
When you move in together, some expenses become shared, while you each maintain your own finances.
The simplest approach is to split the home loan and share expenses such as electricity, insurance, joint debt, renovation costs and unforeseen expenses.
As joint borrowers, you are both responsible for the entire loan – even if you have split the home loan between you. However, it is not a given that both parties will receive the same loan or have the same amount in equity. If you have different shares of the loan, it is important that the ownership share of the property – and therefore also expenses related to the loan and income from a sale – follows the proportion you each pay in.
Remember that owning your own home also brings unforeseen expenses. You should have set aside a buffer for unexpected costs (and we are not talking about surprise parties). It may be wise to think throughwhich insurance policies you need and, for example, set up a joint expense account.
Mortgage
When you need to buy a new home, we provide you with help and advice throughout the entire process.
What does the loan cost?
Calculate how much the home loan will cost monthly and in total.
A guarantor can help you enter the housing market
A guarantor is someone who guarantees all or part of your home loan.
Ung (Young Adults) billion
Buy your first home, even without enough equity, with the help of Ung (Young Adults) billion!