Co-Buying a Home

The rise in property prices and the challenge of raising the required deposit has seen an increase in people buying property with someone other than a spouse or partner. This can be a great way to enter the property market or build an investment portfolio. There are however, some things you need to be mindful of.

Purchasing Structure

Most co-purchasers who are not in a relationship (and some who are) will choose to purchase the property as Tenants in Common rather than Joint Tenants. This protects each buyer’s interests in the property. It is particularly important if one purchaser is contributing more than the other and therefore will expect a greater ownership share. It is also important in the case of the death of one of the owners. It is imperative that you obtain legal advice to make sure the structure is set up correctly for your circumstances.

Plan for the Break Up

When purchasing a property with someone who is not your partner, it is highly likely that you will eventually need to go separate ways. This could be due to changes in one or all persons’ individual circumstances that mean they no longer can or wish to continue with the arrangement. It may be that one party wishes to purchase another property on their own and the current situation is impeding them in some way. It may also be that there are disagreements. If you have a plan from the beginning, the process to buy out or sell can be easier to negotiate.

Have Clear Rules

Apart from the above, it is important to consider what will happen if there are general decisions that need to be made for the property. You will need to know how you are going to manage such things as repairs, selecting tenants for an investment property, rental increases or decreases – i.e. do both parties need to agree and sign off on it or will it be ok for one person to make the decision? Clear rules mean everyone knows where they stand and this can help avoid future issues.

Finances

There are options with mortgages where you can have separate splits for the loans so each person can be in charge of their own split, but it is important to remember you are each guarantor for the other person’s loan. If you are paying a joint loan you will need to factor in how much you will need to contribute to the account the mortgage payments will come from. You will also need to establish how and what you each contribute for such things as rates, body corporate fees, maintenance etc.

Purchasing a property with someone other than a spouse may be a great way to enter the market. With the right steps in place it can be beneficial to all parties.

Contact us to see how we can help you with your property purchase.

 

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