A new trend, gaining popularity among homebuyers, is the idea of the shared mortgage. Buyers may not be able to afford a mortgage on their own, but by pooling their resources, are able to secure a loan and buy a home. Of course, there are some extra challenges with such an arrangement, such as determining who pays what percentage of the mortgage, and whether ownership of the property is split into equal amounts or other percentages. Co-owners will also have to decide what happens if the property is sold. However, it is a way for those with little credit to start building up their score.
According to mortgage brokers and agents, mortgage sharing is a legal option. Broker Anthony Lolli notes, however, that borrowers need to trust those they share a mortgage with. It may be the only option for some individuals who want to own a home, especially in areas where housing prices are increasing, but all parties involved must be open about their finances.
Another issue is that everyone involved is risking their credit. If one person decides to drop out of the arrangement, the others have to be prepared either to take the hit on their credit score by defaulting, or be ready to pay extra. For potential homeowners willing to take this risk, mortgage sharing could be a good option.