Pooling resources with a partner, friend or family member can make home ownership more achievable – but it also adds complexity. Banking Ombudsman Nicola Sladden is urging Kiwis to understand the risks before entering shared financial arrangements.
Ms Sladden said co-ownership can work well when everyone is in agreement about goals and timeframes. “But problems can arise when circumstances unexpectedly change,” she added.
“When relationships end, joint accounts, loans and partnerships can become tricky. It’s crucial to understand how your accounts are set up, and what your rights and obligations are. This knowledge can prevent a difficult situation from becoming even more stressful.”
Steps to protect yourself
Ms Sladden recommends taking practical steps before entering a joint property arrangement:
- Talk openly about money. Make sure everyone is clear about goals, contributions and expectations.
- Plan for what happens if things change. Discuss how assets would be divided if you separated and seek legal advice if formal agreements are needed.
- Understand your bank account mandates. Check how joint accounts are structured and ensure they match what has been agreed between account holders.
- Act quickly if something feels wrong. If a joint account holder uses funds in a way you have not agreed to, notify the bank. The bank can freeze the account to protect the money while you open a separate account.
Lending considerations
From a lending perspective, buying with someone else means you are usually jointly and severally liable for the loan. This means each borrower is responsible for the entire debt, not just their share. If one party cannot meet repayments, the other may be required to cover the shortfall.
Banks will also assess the income, expenses and credit history of all borrowers. While combining incomes can increase borrowing power, it also ties your financial position closely to the other person’s behaviour.
A written agreement, such as a property sharing agreement, can help clarify ownership shares, exit strategies and repayment responsibilities.
If you’re considering buying with a partner, friend or family member, get in touch before you commit. We can help you understand how joint lending works, structure the loan correctly and ensure the arrangement supports your long-term goals.
