How can you afford a better home today? As the Australian property market becomes more buoyant property prices continue to rise, making housing affordability a real issue for some. Common issues such as not having a large enough deposit or not being able to borrow enough funds are causing road blocks for many Australians trying to enter the property market. Choosing to buy a property with a friend or relative could be a solution worth exploring. Joining forces with someone else to purchase a property could solve a number of issues for the property buyer: • you can pool your savings together to generate a larger deposit; • by combining your incomes to apply for a larger loan, you won’t have to settle for your second-choice property; and • chances are good that with two people sharing the loan, your individual repayments will be more manageable. Despite the positives, there are certain risks involved in purchasing property with a friend or relative. Factors you may want to consider in advance and discuss openly with the potential co-owner are: • the ownership split between parties; • who will pay the legal and property fees (stamp duty, due diligence costs and solicitors fees); • the type of mortgage that will be most suitable for all parties; • what happens if one of you misses a mortgage repayment; and • how will you deal with a situation where one owner wants/needs to sell and the other doesn’t. Maria Bekiaris from Money magazine says, “Once you are confident that you can go ahead it’s extremely important to have a formal arrangement in place so that all parties are protected if things go pear-shaped.” However, while it’s important to have a written agreement, there is another vital element. According to Gary Eldred, author of The 106 Common Mistakes Homebuyers Make (And How to Avoid Them), “it is not the written agreement but the people you are dealing with that will determine whether it proves to be a harmonious arrangement.” Contact us today to discuss your home loan options and buying property with a friend or relative.
Posted on: Tue, 16 Jul 2013 04:06:32 +0000