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  • New Members

    Property without your own money

    Of course, it can work well, but its important to understand the pitfalls so that you can make an informed decision and also put plans in place to deal with the possible eventuality of it turning sour.

    Even with friends and family, you need EVERYTHING in writing and a clear mapping out of each person's financial input and their responsibilities.  It would be money well spent to have a legal agreement drawn up to protect all parties' interests.

    You also need to understand what would happen to your share if the person paying the mortgage went into arrears or even bankrupt.

    All of the above will ensure that all parties create the optimum chance of having a positive experience of lending/borrowing money.

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    I was doing a couple of transactions last year and - without me asking - one of my work colleagues said he was able to lend me a good sum of money (several 10s of £thousands).  This helped to pay off some standard bridging earlier (rate with my friend was just over 8%, bridging was around 11%), and also pay for some of the refurb work.

    It worked out really well, but when one of the remortgages was held up caused me quite a lot of stress about being able to repay on time. I had to speak to him about a short extension of the facility, and this was very hard to do.  Fortunately I was able to make repayment in full only about 15 days late. 

    JV with, or borrowing from, friends can work out really well for both parties (he received over £3k in interest as opposed to virtually nothing in the bank), but it can be very stressful when you run into unforeseen issues.

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