Last week we looked at the 3rd of our top 5 strategies for thinking ‘outside the square’ in order to realise your Great Australian Dream of home ownership. In this blog (part 4 of 5) we look at the 4th alternative way to buy your first home.
If you missed the first 3 parts of the series, please select below:
- Strategy 1: Short term pain, long term gain
- Strategy 2: Lean on your parents
- Strategy 3: Buy Now, Pay Later!
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Strategy 4: Team up with someone you can count on
Whether this is your partner, brother, sister, mum, dad, friend or even colleague – if you share the same goals as someone why not consider joining forces to get your foot into the property market. Again, let me stress, this can come with some risks as things don’t always go to plan, whether that be with a family member or a friend (e.g. goals can change). Therefore, you should always consider some sort of formal agreement to cover both parties in case things turn sour down the track.
If things go smoothly, this is a great option as it allows you to buy a property that you maybe wouldn’t have been able to afford on your own as it effectively allows you to boost your borrowing capacity (two or more incomes servicing the loan) and helps ease the pressure of saving a deposit and the upfront costs of buying your first home.
Advantages
- This strategy will allow you to get into the market sooner, providing greater benefits when property markets rise in your area.
- This strategy allows you to buy with someone that either shares a common property goal or it allows you to buy with someone you trust.
- You can buy as an investor to build wealth, or maybe you want to live with other co-owner(s)
- You can choose to buy as Tenants In Common (rather than Joint Tenants) which allows each tenant in common to sell their proportion (unless there is a specific co-ownership agreement with more specific agreements between the parties)
Disadvantages
- While buying a property with friends and/or family might seem exciting & fun, when circumstances change and one partner wants out, things can turn messy. This can result in an undesirable impact on your personal relationships & friendships.
- If you co-purchase your first home with someone else, it means that both parties either use or lose their first home grant & other concessions eligibility.
- If one party defaults on their mortgage repayments and the other parties do not step in to pay the amount due, this will affect the credit ratings of all co-borrowers, as they have joint liability. Most lenders treat co-borrowers as Joint Tenants for loan purposes, whereby parties are jointly liable for each other’s debts if they are using the co-owned property as security for their mortgage.
How can FHBA help with this strategy?
- Our FHBA Brokers along with our legal partner Lawlab, can together help many first home buyers with co-purchasing arrangements. They will be able to provide advice on how to structure such agreements and loans to ensure both parties are protected in case things don’t go to plan, as well as assist you with your borrowing needs.
- Our FHBA Mortgages team of Brokers can assist by explaining the process, risks and advantages of co-purchasing properties to you and the person you choose to buy with.
- The FHBA Team, along with our Services Community, can help you find your first co-owned home and guide you through the entire journey through to settlement and even moving in.
Get your complimentary, no obligation consultation today and find out how we can help you!
