ACCORDING to a new survey, applications for group mortgages are on the increase with HSBC reporting a 50% rise in enquiries on last year.

The arrangement typically involves up to four people, combining forces and borrowing power, to buy a larger premises than they could afford alone.

Of 1000 people, the survey covered a cross section of society and although the results were not divided into age, "generally speaking, its younger folk who are investigating at this sort of option," HSBC spokesman, Tim Pie says. "Its also an increasingly popular choice with first time buyers".

The process, is, however, not without risk.

"If you're considering a group mortgage as an option, it would be wise to seek independent financial and legal advice," says Tim. "We can advise as a lender but what we can't do is make sure that you have a back up plan when if your friend gets married, and wants out. It's really important to get advice about what to do if one of more of the group pulls out of the deal."

"As young people at work or university have to pay rent somewhere, they may as well be paying a mortgage but you really need to know the people that you are involved with. And if you go into it with your eyes open, it can be a great solution."

Philip Bellany from Manchester's Rolands Solicitors is more sceptical: "In a rising market it does superficially sound like a good idea, offering that first elusive rung on the investment ladder, but on balance and closer scrutiny, the joint buyer need to be aware of the consequence of death, insolvency or simply a falling out between members of the group."

"Practical problems arise when one or more of the group wish to realise their investment and sell out - unless there is a joint agreement to contrary any one of joint owners can enforce a sale, which would mean that the ongoing owners have to buy out the party wishing to resign or find someone to replace them."

Given the risks involved, neither Tim not Philip see group mortgages as a significant market contender, where they currently hold a 2-3 per cent share.

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