Buying a home is something that many Kiwis dream about – but it’s a significant financial investment, and many have trouble securing the money to purchase property. Luckily, if you co-buy a home with a trusted ally, you could make your property goals come true.
What Is Co-Ownership?
Co-ownership is when two individuals buy a home together. There are two legal forms of co-ownership in New Zealand:
- Joint Tenancy. This form of co-ownership is where both owners have equal rights to the property. If one co-owner passes away, then the property rights automatically go to the surviving owner. Joint tenancy owners typically share equal expenses and profits.
- Tenants In Common. For this form of co-ownership, property is purchased in defined shares, which are typically allocated based on the contributions of each owner. If a co-owner passes away, then their share usually becomes a part of the estate.
The Major Pros Of Co-Buying A Home
Why do individuals choose to purchase NZ properties together?
It’s Easier To Afford. Properties, mortgage repayments and more can be expensive. Co-buying a home allows you and your partner to share the financial burden, making it easier for both of you to secure the money you need.
Furthermore, mortgage repayments will be more affordable because you’ll each be paying a portion. This will lighten the load for both parties involved, putting less financial stress on you.
It’s An Opportunity To Start Your Property Investment Portfolio. When you work with a partner, you can take a step into the world of investing together while pooling your money.
Co-ownership is a tool for you to start your investment portfolio without having to save up all of the money yourself. You and your partner can earn passive income while paying off your mortgage.
You Can Share Responsibilities. Owning a home is about more than buying the house and letting it be – there are many responsibilities, including maintenance, repairs and staying on top of mortgage repayments. With multiple owners, you can divide tasks accordingly so the home is well taken care of and your payments are paid on time.
The Cons Of Co-Ownership That You Should Know About
Every form of ownership has advantages and disadvantages; what are the cons of co-ownership?
Potential Financial Risk. Co-owners are financially independent, even when they buy a property together. If your partner defaults on their mortgage payments, then you may be liable for the debt.
Be sure you communicate properly when buying a home with someone. Outline everyone’s responsibilities and ensure everyone follows through with their commitments.
Possible Disagreements. One risk of purchasing a property together is that you and your partner may not agree on everything. You may disagree on issues like property maintenance, financial contributions, etc.
Avoid disagreements by creating a thorough co-ownership agreement that you are both happy with. Outlining your arrangement early on will prevent disagreements, conflicts and misunderstandings.
Reduced Privacy And Independence. While having a co-owner to work with has plenty of advantages, as listed above, one disadvantage is less independence. If you decide to live together, then you’ll have less personal space and privacy. If you want to make changes to the property, then you’ll have to make sure your partner agrees with the alterations.
It’s essential to think through your options before you co-buy a home with someone. Be firm in your decision, and consider both pros and cons so you can make a good choice for your future.
Co-Buying Best Practices: Making The Most Of Your Co-Ownership
What can you do to ensure a smooth and successful process?
Stay Communicative. As always, communication is key. Communicate well with your co-buyer and other important parties, like your mortgage broker (Oliver Broomfield Mortgage & Insurances), so that everyone is on the same page. Always be open and honest about everything to avoid misunderstandings or conflicts down the track.
Consider having in-depth conversations with your partner and having a good consultation with your mortgage broker (Oliver Broomfield Mortgage & Insurances) to discuss important details like your home loan requirements, property ownership goals, etc. When finding a mortgage broker (Oliver Broomfield Mortgage & Insurances), be sure you search for someone who offers you personalised services.
Create An Outline For Your Home-Buying Journey. Plenty of work goes into purchasing a home, regardless of whether you’re purchasing a house on your own or buying with a trusted friend. Outline essential steps like finding the right home, negotiating with sellers, searching for the right mortgage with your mortgage broker (Oliver Broomfield Mortgage & Insurances), etc.
Having an outline or a checklist makes it much easier to stay on track. If you’re unsure what steps to take or worry that you’re forgetting something, talk to your mortgage broker (Oliver Broomfield Mortgage & Insurances) for advice.
Make A Budget. How much money do you need? Consider essential factors like having a deposit for your mortgage, managing utility bills and so on. Create a budget with your partner to understand the costs involved with home ownership.
Securing Your Dream Home With Oliver Broomfield Mortgages
Are you planning on buying a home? Contact our Oliver Broomfield Mortgages & Insurance team to receive expert, tailored support.
Getting in touch is easy – please feel free to call us on 027 275 1555 or send us a message online.
Oliver Broomfield Mortgages & Insurance: Let’s streamline the home-buying process together.
