Buying property with friends

Have you ever thought about joining forces with friends or family to buy your first home?

Two out of three Australian homebuyers are likely to purchase a property with someone else, such as a partner, spouse, family member or friend, according to a recent survey.

It makes sense – pooling deposits or sharing the expenses and repayments with someone else can make property ownership more affordable. Then again, it is important to have clear understanding and documentation between all parties.

The latest Mortgage Choice Future First Home Buyer survey found 67 per cent of Australians plan to buy with a partner, spouse, family member or friend, whereas 30 per cent said they would purchase a property on their own.

Company spokesperson Jessica Darnbrough remarked that it is seen as a strategy that enables potential buyers to pool their money for a deposit and utilise their borrowing power to get a loan.

“Co-owners can split the cost of the property and all the associated expenses, so that repayments are noticeably less than what you’d pay if you were buying solo”, Ms Darnbrough said.

So if you’re thinking of purchasing a home with someone else, there are a few things to consider before jumping in headfirst:

Know what both parties want: When looking to buy a property with someone else, it is important to know whether or not you both plan to live there, or earn income from renting it out partially or wholly. Concessions and grants along with tax breaks and other possible outcomes - both negative and positive - of an investment need to be taken into account.

Insurance is essential: Nobody ever expects bad things to happen, especially when you are first starting your home buying journey with that special someone. Nevertheless, accidents can happen, so it is important to have both your life and home properly insured.

Co-ownership agreement: Not everyone purchases property with their partner or spouse; many buy with friends, family and colleagues. If you’re thinking of buying in co-ownership with another, an agreement should be drawn up as a cornerstone legal document for your investment. This will set out the roles and responsibilities of each co-owner and deal with all the important issues upfront, like what happens if one party wants to sell.

Provided everything is set up well, purchasing property with others can be both enjoyable and profitable. After a period of time, you all might be able to make a healthy gain from the initial investment and even use the capital or equity to buy your next property.