Buying property with family and friends

Buying property with family or friends is becoming increasingly common.

This type of property purchase is usually completed as a tenants-in-common purchase, which allows two or more people to own interest in a property, either in equal or unequal shares.

Secure finance for joint purchases

Loan Market mortgage advisers know where to place your application to achieve the right finance for your tenants-in-common purchase.

Talk to your local mortgage adviser to discuss your home loan options.
Tenants-in-common is a popular method for investors, those looking to break into the property market who are not in a stable relationship, and people entering into second marriages or relationships with children from a previous relationship who wish to protect their right to pass the property on to the person/s of their choice.

What are the advantages of purchasing with family or friends?
Advantages of purchasing as tenants-in-common include:
  • Shared costs including the property price and all purchasing costs
  • Shared ongoing costs including loan repayments, maintenance and upkeep costs, property management fees etc.
  • Ability to sell your share or leave your share to whomever you choose, eg. children from a previous marriage

How does home finance work in a shared purchase?
Lenders may allow you to mortgage each share of the property independently, and other co-owners have no obligation to pay a mortgage that is only over another owner’s share of the property. The types of home loans available to secure the purchase include most used for a more traditional joint tenants purchase.

However, some lenders may not permit these types of mortgages, so be sure to check your finance options with your mortgage adviser before agreeing to any purchase.

Should I sign a co-ownership agreement?
In order to avoid any problems in the future, it’s wise to enter into a co-ownership agreement. Among other things, a co-ownership agreement may set out the terms of on-selling shares in the property, proportion of ownership and liability for costs such as the mortgage, maintenance and upkeep.

You should also consult a solicitor to ensure your legal rights are protected.

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