Buyers should be aware of how each others' credit status could affect their chances of obtaining a mortgage and later financial security, credit reference company Equifax has warned.



If one buyer is unable to make mortgage payments, which Equifax hinted was increasingly likely given current levels of debt in the UK then the other buyer will be left to foot the bill on their own.

Additionally, one party's credit problems or history of refused credit could lead to an increase in the cost of the mortgage for both.

Neil Munroe of Equifax urged buyers to think about trying to improve their credit rating before they make a major purchase.

There is no guarantee that things will not go wrong when people buy a home together. There are steps though that buyers can take to avoid any potential problems, he told My Finances.

Mr Munroe advised that would be buyers should insist on an honest relationship with their buying partner and that being open about existing credit agreements and debt is an essential part of such a relationship.

He warned: If a friend is not prepared to share information about their financial status buyers may need to be cautious of entering into a financial agreement with the significance of a mortgage.

Perhaps they are hiding unpaid loans or any other financial problems which can affect the mortgage rate buyers receive. An open relationship between all parties will also let the buyer know if their friend will be financially stable and reliable.

Richard Cohn of SharedSpaces.co.uk told My Finances: I would urge people who decide to buy together to have a deed of trust drawn up by a solicitor, setting out the rights and responsibilities of both parties involved and in particular what should happen when one of you decides to move on.

© Adfero Ltd