Buying a Home With Family

With rising property prices and stricter lending criteria buying a home or investment property is becoming harder than ever. As a result, we are seeing more buyers pooling their resources and buying property with family. However, as with any contract, it is important you go in with your eyes wide open. Here’s what you need to know:

Teaming up with family

Property prices are the highest they’ve ever been in most major cities around Australia and New Zealand, so savvy buyers are teaming up with family to get their foot on the property ladder.

There are numerous benefits to buying a home with family, including:

  • Buying now rather than waiting 2 or 3 years to save the extra deposit needed.
  • Larger buying capacity means more choice in terms of location (closer to work/family or in a nicer suburb) and style of property (a house with a section instead of a unit or apartment).
  • More manageable repayments for your part of the loan and lower financial commitments.

On the other hand, it’s worthwhile mentioning some of the disadvantages to buying property with family:

  • Things can get complicated as circumstances change – you might decide you’re ready to sell while your family wants to keep the property.
  • You may end up having the to manage the full repayments yourself if others’ financial situations change.

Top tips

To help avoid many of the potential issues that could come with buying property with family, we recommend you

  • Get professional advice – we cannot stress enough the importance of talking to a solicitor or conveyancer before entering into any sort of co-ownership agreement. This will give you the necessary understanding of how to protect yourself from financial risk.
  • Have a co-ownership agreement drawn up – although they are family, it is still necessary. The agreement should outline how costs are split, what happens if one party defaults, and what happens if the loan needs to be re-financed, to be certain everyone understands the expectations and reduce the chance of issues arising later down the track.
  • Ensure that your agreement includes details such as what happens if one party wants to sell and how long you intend to hold the property.

And lastly, talk to your mortgage broker/adviser about who should be the borrowers and guarantors, and to get the best advice on structuring the loan.

Other options

There are other options - if joint ownership isn’t right for you, your family may still be able to help in other ways. Talk to one of our broker/advisers at Loan Market about using a gift or personal loan from family members or having a family member act as guarantor so you can buy a home or investment property.