Property finance: Good time to partner up to buy property

Richard Windeyer

Richard Windeyer

FOR borrowers looking to take advantage of the low interest rate environment and the wide range of competitive home loan deals on offer, buying property in co-ownership with someone else may be a good way to get a foot in the door.

In fact, the latest Mortgage Choice Future First Home Buyer survey found 67 per cent of Australians plan to buy with a partner, spouse, family member or friend - which is significantly higher than the 30 per cent who said they would purchase a property on their own.

Purchasing with someone else often makes property ownership more affordable.

It is a strategy that enables potential buyers to pool their money for a deposit and utilise their borrowing power to get a loan.

Co-owners can split the cost of the property and all the associated expenses, so that repayments are noticeably less than what a borrower would pay if they were buying solo.

For those borrowers thinking about purchasing their first property in co-ownership with someone else, like a sibling for instance, there are a few things to consider before jumping in head first.

■ Know what both parties want

When considering purchasing a property with someone else, it is important to know whether or not both parties plan to live in the property, or earn income from renting it out partially or wholly.

Concessions and grants along with tax breaks and other possible outcomes - both negative and positive - of an investment need to be taken into account.

■ Financing the purchase

Financing a co-ownership agreement is not all that different to traditional borrowing.

Lenders will still look at the income, expenses, assets and liabilities of each borrower and expect regular lending criteria to be met such as good savings habits, steady employment history, clean credit record, and so on.

■ Avoid common pitfalls and seek advice

Difficulties can sometimes arise between buyers who are living together, which is why, as with any major financial transaction, it is important to seek legal and financial advice before signing a co-ownership agreement.

■ Co-ownership agreement

An agreement should be drawn up as a cornerstone legal document for the investment.

■ Insurance is essential

Nobody ever expects bad things to happen, especially when they are starting their home buying journey with a brother or sister.

That said, accidents do happen, so it is important for borrowers to have both their life and home properly insured.

For more information phone Richard Windeyer on 1800 01 LOAN.

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