Splitting the cost

Looking to crack the property market but struggling to raise the necessary deposit? A family member or friend might be able to help you reach your investment goals sooner.

The cost of Australian real estate can sometimes leave us gobsmacked, but for potential buyers who think they’ll never crack the market, there is a way to meet the affordability challenge.

Teaming up with a family member or friend can increase your deposit-raising power, allowing you to achieve your dreams of home ownership sooner.

Being willing to raise a combined deposit and enter a co-ownership agreement can also boost the range of property you can afford as the amount you are eligible to borrow will increase.

There are, however, risks associated with co-purchasing a property and these should be considered carefully.

Purchasing an investment property can be a stressful venture and disputes often occur. Communicating with your partners is an easy way to curb any disagreements or concerns you may encounter along the way.

From the outset, be sure to have a clearly defined investment strategy to ensure there is no confusion later down the line.

Obtaining legal advice is also a must as problems may occur and having that added protection could save you thousands.

But just because you can borrow more money doesn’t necessarily mean you should. Refrain from over-committing by avoiding borrowing an excessive amount.

As a co-buyer, it is easy to consider the mortgage a 50-50 deal, but this is definitely not the case. Each of you are responsible for the entire mortgage and may encounter financial difficulties if one of you over-commits.

Whether you invest with a family member or friend, you should always view co-ownership as a business deal that requires mutual understanding and clearly defined obligations supported by similar values and goals.


Source Lending Services Victoria