According to data from ING DIRECT, joint mortgages now make up more than three-quarters of new loans, up from 70 per cent in 2010. But couples are not the only ones jointly buying a property in Australia, as siblings are also now pooling their savings to help each other own a property.
“There has been a sharp increase in the proportion of siblings buying together in NSW and a sharp decrease in South Australia,” said Mortgage Choice spokeswoman Jessica Darnbrough. She said that the rising property prices and affordability issues have pushed more siblings to consider this option.
“By buying with a sibling, each party effectively increases their borrowing capacity and reduces the deposit they need to save individually—thus making home buying more affordable,” Darnbrough added.
She recommended deciding upfront whether to become ‘tenants in common’ or ‘joint tenants,’ which differentiates between co-owning the property and the mortgage or each owning a specific percentage of the property.
However, a survey done by First Home Buyers Australia showed that buying with family was not an attractive option for most young Aussies. Buying with a partner is still the preferred method of around 71.5 per cent of the 500 respondents while buying alone was the second most popular choice at 23.7 per cent. Only 0.5 per cent said that they intend to buy with a sibling.
Dream Financial mortgage broker Paul Bevan warned even though you are in good terms with your sibling, an written agreement should still be put in place.
“What if one of you loses your job and can’t contribute to repayments? Or you want to go overseas and travel for a year?” he asked. “Life happens and goals change, so it’s best to be prepared for these types of scenarios.”
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