Should you co-buy your first home?
Australians all over the nation are co-buying property to combat rising prices. Find a home that’s out of your range? Group up with trusted friends or family. Discover that you can’t borrow as much as you’d like? Multiple income streams could improve your borrowing power. Don’t want to take the risk of buying a property on your own? With more people involved, you mitigate those problems.
Co-buying and co-operation; it’s a winning combination. But that doesn’t mean it’s the right choice for everyone. Here’s what you should know about co-buying before committing to that multi-party mortgage.
What is co-buying?
Co-buying is exactly what you’d expect: purchasing a property along with somebody else or with a group of people. This could be a romantic partner, a group of friends or even your family.
It’s a popular option among all types of property hunters but it’s first home buyers that have taken this method and made it their own. They are choosing to co-buy their first property as a means of getting on the property ladder – the first step being the toughest.
What are the benefits of co-buying in Australia?
It’s a clear solution to the problem that many Australians simply cannot afford to purchase their first home on their own. The financial benefits are many: not only do you get to call yourself a home-owner, but you’ll also be receiving part of an asset that has been growing incredibly fast over the last year. Some experts (SQM Research, CoreLogic RP Data and BIS Shrapnel) are expecting that growth to continue over 2017. You have to play the game to win the prizes, and co-buying could be your ticket to ride.
However, there are a few risks and trust is a big factor in this decision. Rather than relying on yourself to make the mortgage payments, you are now relying on a group of other people. If you have invested with relatives or close friends, this can be less of a problem – but it still pays to ensure that you sign an ownership agreement and structure the ownership correctly to reduce those problems. Otherwise, you may find that somebody has to take a break on repayments, and you are now responsible for the entire mortgage!
That being said, if you can find a good group of people who are willing to work within a solid legal framework, co-buying can be a great way to spring yourself into home ownership. Whether you are buying for profit or for the pleasure of owning your own home, co-buying could offer you a great opportunity.
For more financial tips on how to get in to the property market, contact Elders Home Loans.