Buying property with friends, family & partners
What is co-ownership?
Co-ownership is a way of sharing the ownership of a property between two or more people – friends, family members or partners (also called tenants-in-common). Put simply, it involves:
- Pooling your money with others to put down a deposit on a home;
- Combining your borrowing power to get a good home loan;
- Paying off the mortgage on your home instead of paying rent; and
- Having the flexibility to sell out your share of the property if you want to.
Sharing the ownership of a property has many advantages. You can split the cost of purchasing and running a home (all those legal fees, stamp duty, rates & repairs), which means you can get into the property market at a fraction of the cost you’d pay if you were buying on your own. You can also dramatically reduce the length of your mortgage and own your property sooner.
A co-ownership agreement
If you’re ready to take advantage of the benefits of co-ownership, it’s important to get a legal expert to make sure the co-ownership process goes smoothly. A co-ownership agreement is a legal document which sets out the rights & obligations of each person with a share in the property. It deals with all the important issues upfront, like what happens when one person wants to sell their share, when someone defaults on their mortgage payments and more. Most importantly, a co-ownership agreement is legally binding on each of the co-owners, to ensure there are no legal hassles down the track.
PodProperty is Australia’s leading provider of co-ownership agreements and has made the dream of owning property come true for thousands of people right round the country. Their agreements are easy to understand, affordable and cover all the issues when it comes to sharing property as tenants-in-common.
If you have other questions about co-ownership, PodProperty has a really useful FAQ section.
How do I get a home loan that suits me?
Buying property with others means that you’ll need to carefully consider your mortgage options. Mortgage Choice can help you choose from over 300 home loan products and advise you on the home loan options available to you when purchasing property with your friends & family. And a well-drafted co-ownership agreement can regulate how you & the other co-owner(s) pay off the mortgage and in what amounts.
What’s the legal principle behind co-ownership?
Tenancy in common differs from joint tenancy in a number of ways, especially when it comes to passing on your share of the property, owning land in equal or unequal shares and what happens in one party dies before the other(s).
What are the risks?
There are a variety of risks involved in purchasing property with others. The best way to mitigate all the possible hassles is to get a co-ownership agreement in place before you buy property as tenants-in-common (or, if you’re already a co-owner, you can get a retrospective agreement).
The primary reason co-borrowers get a co-ownership agreement is to prevent the group purchase turning sour. The parties might have a disagreement about the property, one party might want to move out and use their share as an investment, someone might default under their finance or want to sell out to the other parties.
What about Government assistance for home buyers?
Co-owners can still take advantage of the Federal and State Governments’ various schemes including the First Home Owners Grant, First Home Saver Accounts and exceptions to stamp duty. The amount you can save depends on your individual situation and the state where you’re purchasing property.
For a great source of information about co-ownership and the benefits of purchasing property with friends or family, download PodProperty’s Home Buyer’s Guide.
How to get started?
Your Mortgage Choice broker is a good starting point to start the discussion about co-ownership. We can help you realise your home owning dream by:
- setting up a meeting with you to discuss your co-ownership options
- helping you to choose the home loan that suits you from the hundreds of loan products that we have available through our panel of lenders
- assisting with the paperwork
- and doing all the running around.
Mortgage Choice will work with you to ensure your group gets a home loan that suits your situation. Our knowledge and advice on co-ownership and home loan options is at no cost to you.