It is natural for spouses to co-purchase their first homes, but it is less common among singles – especially non-related ones – to co-purchase property. Yet this is an increasing trend among first home buyers, according to First Home Buyers Australia co-founder Daniel Cohen.
Among the two major drivers of this trend is housing affordability. "The hardest part of being a first home buyer is putting a deposit together," said Cohen. "By co-purchasing, you are pooling together multiple people's savings which boost the overall deposit position."
Another major reason is marriage later on in life. But even if a person is not planning to get married, he may still co-purchase property with family and friends.
"Most people in Australia don't purchase property on their own. So if they have no life partner, they may consider siblings and friends to help achieve an investment property," Cohen said.
However, such an arrangement may become problematic in the long run, which is why purchasers need to prepare for contingencies beforehand. This includes getting legal and accounting advice on property ownership, proportion and shares, and even the involvement of spouses. It might even be best to have a company acquire the property or involve other trust arrangements.
It is also important to have a legally-binding document that contains all the details on how the investments will be managed and funded by the investors. There should also be provisions for disputes, deaths, divorces, and disposals.
"In the case of an investment property, you must first know as much as you can personally and financially about your proposed co-owner/s and really trust them," said property law expert Tim O'Dwyer.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan