Buying a home with family

A combination of rising property prices and stricter lending criteria has made it harder than ever to buy a home or an investment property. As a result, many buyers are pooling their resources and buying property with family. As with any contract however, it’s important you go in with your eyes wide open. Here’s what you need to know.

 Buying a home with family has a number of benefits including:

  • Buying now rather than having to wait 2 or 3 years to save the extra deposit needed.

  • Bigger buying capacity means more choice in terms of location (a better suburb, closer to work) and style of property (a house rather than a unit or apartment).

  • Lower financial commitments and more manageable repayments for your share of the loan. 

On the down side, it’s worthwhile noting some of the disadvantages to buying property with family:

  • Things can get messy as circumstances change – you might decide to sell up but your family want to hold onto the property.

  • Financial situations change too and you could end up having to manage the full loan repayments by yourself. 

Top tips

To minimise the risk of any potential issues that could arise from buying a home or investment property with family, we recommend you do the following:

  • Seek professional advice – it’s vital you talk to a solicitor or conveyancer before entering into a co-ownership agreement. That way you’ll have a clear idea of how to protect yourself from financial risk.

  • Draw up a co-ownership agreement – sure, they might be family, but it’s still a necessary procedure. Drawing up an agreement that outlines how costs are split, what happens if one party defaults, and what happens if the loan needs to be re-financed, will ensure everyone is on the same page and hopefully reduce any disagreements further down the line.

  • Have an exit strategy – part of your agreement should include details like how long you intend holding onto the property for, and what happens if one party wants to sell up.

  • Talk to your mortgage broker/adviser to ensure you get the best advice on how to structure your loan and who should be the borrowers and guarantors. 

Mel Brayshaw