Thinking of buying a property with a friend of family member? Teaming up with someone else may expand your purchase options as well as allow you to split the ongoing costs of home ownership with another person.
However, there are a number of considerations to bear in mind if you want to make co-ownership a success:
1. Work out what you both want from the property
Before you go to your first ‘open home’ inspection, spend some time discussing key issues such as whether you’ll both live in the property, whether one of you will live in the property, or whether it will be rented out.
Decide on suburbs you are both interested in, and the type of property that appeals. You may find a buying calculator useful in helping you get an idea of your buying power in your preferred suburbs.
2. Have an exit strategy
It may seem strange to discuss selling your property before you’ve even purchased it, but it could be worth managing expectations even at this early stage.
Consider how long you intend to keep the property for and how you will manage the situation if one of you wishes to sell in the future.
3. Talk to your broker or lender
Have a chat with your lender or broker to get a clear picture of your combined borrowing capacity and responsibilities. For example, if your co-buyer can’t keep up their share of repayments you may find you are responsible for the full value of monthly repayments.
If you have any doubts about how well your co-buyer manages money, now could be the time to have a frank and open discussion with them.
4. Enter into a co-ownership agreement
A formal co-ownership agreement drafted by your solicitor will formalise important details about the ownership structure, how expenses will be shared or what will happen if one person wants to sell up at a later stage.
Organising a formal co-ownership agreement may add to the upfront cost of your home but it could save a lot of hassle – and potentially the friendship – if things turn pear-shaped further down the track.
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