 Co-buying? Is it for you?
Buying property with a friend, family member or business partner is one way to make owning a property more affordable.
For many first time buyers, the tightening of lending criteria has meant that although interest rates are low and housing is more affordable, they are still sometimes left out of the market.
First home buyers do not necessarily loose their First home owner grant either. If two non-related people (that is not spouse or partner) puchase a property together then one person can claim the grant.
Managing Director of myrate.com.au says co-borrowing is still a very small segment overall within the home loan lending market.
"In the past, we would see two or three co-borrower applications out of every hundred received whereas now we are now seeing 8-10."
With no deposit loans now a thing of the past, lenders require a deposit for the property home loan and a real savings history, not just government grants. Purchasing a property in joint names can have obvious benefits.
Most lenders offer a Property Share Loan arrangement designed to help those who wish to co-own. Lenders recommend that you agree upfront all the terms for entering into this arrangement together, and make sure you have proper documentation to support these decisions. And, envisage the worst case scenario – what would happen if your friendship break down?
Carolyn Miller, an advertising executive, bought a property with a friend in 2004 and said it was the start of financial independence and she was happy with the process. As both Carolyn and her girlfriend were living at home, they saved for two year, put down a deposit and were careful to get contracts.
There were extra legal costs but the contracts and agreements were important.
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