So you’re in the market for your first home. But what if you’re not in a position to buy on your own? Can you buy a home with someone else? Can you go in on a home loan with a friend?
If you’re not able to buy a property on your own, you might be thinking about buying a home in partnership with a friend or relative. It’s known as co-purchasing, or co-borrowing, and it’s a small but growing trend. If you happen to be married, co-purchasing with your spouse or partner could be part of your plans to buy a home. But if not, you could look into purchasing with someone else – so what should you consider before signing on the dotted line?
Advantages to co-purchasing
By combining your resources, you and your co-borrower, or co-borrowers, are likely to have greater buying power, and this may give you access to a greater range of properties or better-quality homes. It can be quicker to raise a first-home deposit, and you may be able to put down a larger deposit. Another benefit might be that it’s easier to meet the repayments with more than one salary.
The need for a co-purchasing contract
The key to success is having a strong relationship with your co-borrower, with enough trust to plan ahead for how you will share the rewards and costs of owning a home. While it might be an awkward conversation, it’s smart to put pen to paper and create a legally binding contract, or co-purchase agreement.
A co-purchasing contract might cover things like ongoing maintenance, payment for damage, incidentals or renovations. A contract is also essential because if one person defaults on a loan payment, the other person is often liable. A contract also becomes critical if there is a breakdown in the relationship and one of the parties decides to opt out. No one wants to think about these bad eventualities, but you need to have a contract in place to deal with them just in case. A contract can also help if one co-owner wants to sell their share further down the track.
It’s a good idea to seek legal advice to make sure you’ve got all the key elements covered if you’re thinking of co-purchasing.
If you’re keen to co-purchase a home with a partner, or if you have any other questions about buying your first home, we’re here to help.
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- Chapter One : Getting started
- Chapter Two : Your Dream Home
- Chapter Three : Money Matters
- Chapter Four : Ways to Purchase
- Chapter Five : Understanding Interest Rates
- Chapter Six : Understanding Home Loans
- Chapter Seven : Lending Sources
- Chapter Eight : Getting Your loan
- Chapter Nine : Choosing a Home
- Chapter Ten : Steps to Settlement