With Valentine’s Day just around the corner, we thought it would be appropriate to talk about what to consider when purchasing a property with someone else, such as a partner, spouse, family member or friend.
Purchasing a property with someone else is an increasingly popular, viable and, in some cases, the only way for many Australians to enter the property market.
According to the latest Mortgage Choice Future First Home Buyer Survey, 67% of Australians plan to buy with a partner, spouse, family member or friend – significantly higher than the 30% who said they would purchase a property on their own. Purchasing with someone else often makes property ownership more affordable. It enables potential buyers to pool their money for a bigger deposit, potentially save on expensive lender’s mortgage insurance, and utilise their increased 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 you’d pay if you were buying on your own.
So if you’re thinking of taking your relationship to the next level this Valentine’s Day by purchasing your dream home with the one you love, there are a few things to consider before jumping in head first:
1. Know what both parties want: Are you buying to live in the property or rent it out partially or wholly? When considering purchasing a property with someone else, it is important to know the answer to that question. Concessions and grants along with tax breaks and other possible outcomes – both negative and positive – of an investment need to be taken into account.
2. Having adequate insurance is essential: Nobody ever expects bad things to happen, especially when you are first starting your home buying journey with that special someone. That said, accidents do happen, so it is important to have both your life and home properly insured.
3. Consider a co-ownership agreement: Not everyone purchases property with their partner or spouse; many buy with friends, family and colleagues. If that is the case, a co-ownership agreement is a cornerstone legal document for your investment. It sets out the roles and responsibilities of each co-owner and deal with all the important issues upfront – like what happens if one party wants to sell.
Whether you are buying with a spouse/partner or in co-ownership with a friend, family member or colleague, purchasing property is a major milestone.
And, provided everything is set up well, purchasing property with a significant other can be both enjoyable and profitable.
After a period of time, you and the other party/ies may be able to make a healthy gain from the initial investment and you could even use the capital or equity to buy your next property.
Talk to our licensed mortgage brokers about your ownership options and most appropriate solutions for your particular needs. Call (08) 9220 5200 or contact our home loan specialists Jason Coviello and Daniel Eigenmann directly.
DANIEL EIGENMANN. Daniel is the franchise manager for Mortgage Choice in Perth and the Western Suburbs area. Daniel is an Authorised Credit Representative of Mortgage Choice Ltd (CRN# 446566).