Butler Finance
  • Home
  • Residential Loans
  • Business and Commercial Finance
  • Car and Equipment Loans
  • Contact Us
  • News

Sharing Property Ownership

16/3/2015

1 Comment

 
Cut the cost of property ownership in half by buying with a family member or friend. Save only half a deposit, pay only half the mortgage and cover only half of the bills. Sounds tempting, doesn’t it?

Property co-ownership is a great way to get a foot in the door at a reduced price but when it comes to mixing money and friendship, there’s plenty that can go wrong unless you take these important steps to forge a successful partnership.

1.Agree on the big picture

Talk together about your reasons for wanting to buy, your goals for owning a property and your timeframe for selling. You should both have similar mindsets and objectives.

2.Put it in writing

Have a legal ‘co-ownership’ agreement prepared that outlines the rights and obligations of each person with a share in the property. It should provide a formula for either of the co-owners to exit the investment – for example, they may have a change in financial circumstance or want to purchase a property with their new partner.

The agreement should also include a mediation clause that outlines how disagreements should be resolved.

3.Know your group finance options

A joint mortgage is one way a group of property buyers can apply for a mortgage as it allows them to combine their incomes in order to qualify for a higher loan amount than they would individually. As co-borrowers, you and your partner are held equally liable for repayment of the loan – so if one person stops making payments or makes late payments, the financial responsibility will fall to the others listed on the mortgage to make up for these payments.

‘Tenants in common’ is another way to consider structuring your lending. It allows you to have equal or unequal shares in the property, so one of you could own 40 percent and the other 60 percent.

As co-ownership introduces more complexity than a typical individual owner-occupier or investor purchase, you should ensure you choose a borrowing arrangement that protects your investment.

4.Seek advice

Structure your lending to be as flexible as possible to consider future changes in personal or financial circumstance. We can sit down with you to discuss some ‘what if’ scenarios, such as what to do if your partner suffers a reduction in income or is made redundant.

1 Comment
Camila Perkins link
26/5/2022 11:45:57 pm

Lovved reading this thank you

Reply



Leave a Reply.

    Archives

    March 2020
    March 2019
    June 2017
    April 2017
    February 2017
    January 2017
    December 2016
    November 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    August 2015
    May 2015
    April 2015
    March 2015
    February 2015
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    December 2013
    November 2013
    September 2013
    August 2013
    May 2013
    April 2013
    March 2013
    February 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    September 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011

    Categories

    All
    Interest Rates

    RSS Feed

Powered by Create your own unique website with customizable templates.