Getting onto the property market can be a financial stretch for many first-time home buyers. Even if you have managed to scrape up enough savings for a deposit on your mortgage, there are still many costs that come with a house that can be expensive for first-time property buyers. Here are six things you need to consider if you are considering to co-buying a house with a friend or family member.
Understand what it means to co-buy a house
There are various ways to crack the property market, and co-buying is becoming an increasing option for many Australians. Co-buying is when you enter into an agreement with a friend, family member, or colleague to purchase a property. This also means that you will both co-sign a loan to make this possible. Both parties will shoulder the responsibility of ensuring that the monthly repayments on the mortgage are met which is vital that you choose someone responsible and reliable to get into an agreement with.
Assess the financial risk
A recent survey by Kohab found that 31% of Australians said that they are considering co-buying property. It also revealed that Millennials formed a large group of co-buyers in order to get a foot into the property market. However, it is vital that you assess the financial risk of getting into an agreement with a person to purchase a property. It is advisable that you choose someone who will be able to help you shoulder half of the payments that come with the house and will be able to do so consistently.
Have a legal agreement in place
When it comes to an important such as purchasing property you want to ensure that you have safety procedures in place. It is also important that you both agree in terms of who plays what role and what are your expectations when it comes to such agreements to avoid any confusion or fallouts. It is not uncommon for things to go sour between family and friends. Therefore, drafting a legal agreement will ensure that both parties get a fair deal and separate with less stress as possible.
You will have to compromise
Buying property together is a partnership. There will be times where you will not agree with each other either on the size of the property, its location, and the budget. You must consider the fact that you will have to compromise to find a solution that is suitable for both parties. This also means that you need to discuss back up plans such as what you plan to do should your circumstances change, or the other party wants to move out because they are now able to afford a place on their own.
Be open with your finance
Think of buying your house as a business transaction. If you are purchasing it with someone you both need to be honest and open about your financial standing to avoid making the other person feel shortchanged. It will also help you set a realistic budget in terms of how much you can afford without having to bite off more than you can chew. You both need to be present during loan discussions, legal agreements, and other financial decisions so that you remain on the same page.