Friends warned over mortgage restrictions

Research conducted by the organisation revealed that aspiring first-time buyers were opting for alternative routes to get into the market as a result of increasing house prices.

Julia Harris, mortgage analyst at moneyfacts.co.uk, said: “Property prices are still beyond the reach of many would-be first-time buyers using the traditional 5-10 per cent deposit, at 3.5 times salary over 25 years model.

“Lenders have come up with a number of initiatives to try to overcome the difficulties that people face when trying to buy their first home. But one relatively new option for first-time buyers which has not been explored so deeply is buying with a group of friends.”

However, Harris warned that of the 60 lenders who offered a mortgage catering for multiple occupants, over 40 of these would only consider the highest two salaries. She added: “While the monthly repayments will be more affordable due to being spread between all applicants, the property itself may still remain out of reach.”

Responding to the research, a spokesperson at the CML, said: “Buying with friends can be a realistic way to get onto the housing ladder, and can be cheaper than renting. But the more people involved, the more important it is to think about the risks if one of the partners defaults, or wants to sell.

“These complexities mean that so-called ‘mates mortgages’ are probably destined to remain a small and specialist part of the market.”