Recent data shows a new trend emerging in property. Apparently, roughly eight out of ten new mortgages are being loaned as joint accounts. This number has risen in unison with the rise of property prices in Melbourne and Sydney, according to recent data.
And it isn’t just husbands and wives taking out these joint accounts. Many properties are being bought by friends and siblings who can’t afford to buy property on their own. One could argue that buying a property with a sibling is more stable than with a spouse, as the average Australian marriage lasts only eight years.
If you have a reliable friend or family member who’s looking to buy property, and you’re also looking, it may be worth considering a joint purchase. There are pros and cons of course, but it’s the right move for many homeowners right now. It may be the right move for you as well.
How to buy a property with family or friends
There are a few arrangements and methods that you can explore if looking to acquire property with a family member or friend.
Typically, a joint purchase will involve a memorandum of transfer: an agreement that sets out the terms of the mortgage. If tenants or buyers prefer to have uneven shares, they can put property under separate names to avoid later disputes.
There are many moving pieces and possibilities, but the most important thing is to seek legal counsel and try to thoroughly consider any and all possible future scenarios. What happens if somebody wants out? What if there is a sudden change of plans? Everything should be thought through in advance.
Is buying property with someone else a good idea?
It’s up to the people involved to answer that question. For many, buying property as a joint venture is a great way to reduce the cost of getting into the property market.
Just remember, you’re responsible for the debt you take on with a partner. If you need to borrow again down the track, the bank will take a look at the performance of the entire mortgage not just your part.
Mortgage House
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.
