For many would-be property buyers, saving the deposit they need to buy a home may feel elusive. If this is the case for you, there are a few optionns for making property ownership more achievable.
One of these strategies is to buy with other people – minimising your costs by sharing the load with friends or family. But before heading down this road, there are a few things to weigh up first.
1. Who should you buy with?
No matter what property you buy, you’re going to be investing a lot of your time and money in making the purchase. Choosing the right person or people to buy with is key to making the experience a positive one.
Start by making sure you have the same goals – will this place be your home or an investment property? What are each of your longer-terms goals for the property, and do they align?
2. How many people do you need?
Generally, having fewer people involved in buying property means you’re able to take a greater share of any income it generates, and reduces the chance of disagreements as there are fewer opinions in the mix. That said, the more people going in, the more affordable the property will likely become for you.
3. What structure of ownership do you want?
Consider not just who is going to co-own the property, but also how. Will everything be split evenly or will one person have a larger stake?
When it comes to property co-ownership, there are typically two options in terms of structure – joint tenancy or tenants in common.
- Joint tenants own an even share of the property. If one party dies, the surviving tenant/s take the whole property.
- Tenants in common can have an unequal distribution of ownership. Each owner can bequeath their interest in the property through their will to a beneficiary rather than another co-owner. This is usually a more flexible form of ownership than joint tenancy, so make sure your and everyone else’s rights and obligations are clearly set out in a legal agreement before going into this arrangement.
Financially, you are responsible for the whole debt you take on with a partner when buying property together. And should you need to borrow more money down the track, your bank or lender will account for 100% of any joint venture debt, not just your share.
CommBank Property Share allows you to split the cost of buying property with others, while still retaining individual control of your finances and accessing a range of features available with CommBank home loans such as redraw facilities, mortgage offset accounts and lines of credit.
4. How will you handle disputes?
At some point co-owners may have a difference of opinion. This could be over, for example:
- When to sell
- When to refinance
- Whether someone should be bought out
- How to split income and costs associated with the property
- Mortgage repayments
Obtaining legal advice and creating a legally binding co-ownership agreement can help provide clarity and may prevent these disputes from arising.