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Navigating Co-Ownership: The Ins and Outs of Buying Property with Others · That Home Loan Hub

• 0:10
  Speaker 1: Today we're diving into a hot topic.
• 0:12
  Speaker 1: Buying a property with friends or family Sounds like a good idea, right, split the cost, get on the ladder faster and share the journey.
• 0:19
  Speaker 1: But, as with any relationship, money changes things.
• 0:24
  Speaker 1: So let's break down what you need to know before you buy a home with someone else.
• 0:30
  Speaker 1: Look, with house prices being what they are in New Zealand, more and more people are turning to co-ownership, whether it's siblings, best mates or even parents pulling resources.
• 0:39
  Speaker 1: This approach can work beautifully, but only if it's done the right way.
• 0:45
  Speaker 1: Now why would you buy with someone else?
• 0:47
  Speaker 1: Let's be real Buying on your own is tough right now.
• 0:51
  Speaker 1: By joining forces, you can combine deposits, borrow more with combined income, share mortgage repayments and living costs.
• 0:59
  Speaker 1: It can fast track your journey onto the property ladder, but it's not without the risks.
• 1:04
  Speaker 1: So key things to consider.
• 1:07
  Speaker 1: Here's where things get serious Before signing anything.
• 1:11
  Speaker 1: A legal ownership structure.
• 1:12
  Speaker 1: There are two main types Joint tenants you both own the property equally.
• 1:17
  Speaker 1: If one person dies, the other automatically gets the whole thing.
• 1:22
  Speaker 1: And then there is tenants in common.
• 1:24
  Speaker 1: Each person owns a set percentage which can be passed on or sold.
• 1:28
  Speaker 1: Always get legal advice on which suits your situation.
• 1:31
  Speaker 1: Now a core ownership agreement.
• 1:34
  Speaker 1: This is essential.
• 1:36
  Speaker 1: Think of it like a relationship contract for your property.
• 1:40
  Speaker 1: It should cover who pays what.
• 1:42
  Speaker 1: What happens if one person wants out how repairs and renovations are decided?
• 1:46
  Speaker 1: What if someone stops paying their share?
• 1:48
  Speaker 1: Look, it may feel awkward, but it's better to have the awkward conversation now than the legal battle later.
• 1:57
  Speaker 1: Mortgage considerations Banks treat joint applications as a package deal.
• 2:02
  Speaker 1: If your friend has a bad credit, it can affect you too.
• 2:06
  Speaker 1: Also, both parties are usually jointly and severally liable.
• 2:11
  Speaker 1: That means if one can't pay, the bank can chase the other for the entire loan.
• 2:17
  Speaker 1: And let me give you an example.
• 2:20
  Speaker 1: A couple of friends in Wellington came to me wanting to buy a two-bedroom flat together.
• 2:24
  Speaker 1: They both had solid incomes, decent savings and thought it would be straightforward.
• 2:28
  Speaker 1: What helped them succeed?
• 2:30
  Speaker 1: First of all, we got them in front of a lawyer early.
• 2:34
  Speaker 1: They agreed upfront on how long they'd keep the property and what happens if one of them wanted to move on, if we made sure the mortgage was structured in a way that gave them flexibility down the line as well.
• 2:45
  Speaker 1: Now, fast forward to three years.
• 2:47
  Speaker 1: They're still friends, they're still co-owners and now looking at a second property.
• 2:53
  Speaker 1: One thing you should not forget is the exit strategy, the most important part.
• 2:58
  Speaker 1: Please, please, please, don't skip this.
• 3:01
  Speaker 1: What happens if one of you wants out?
• 3:04
  Speaker 1: Life happens, people get married, move cities, have kids, so you must talk about how you'll value the property, how one can buy the other out, and what happens if neither can afford to.
• 3:17
  Speaker 1: Having this written in your core ownership agreement is what protects your friendship and your finances.
• 3:24
  Speaker 1: Now final thoughts.
• 3:26
  Speaker 1: Buying with others can be an amazing stepping stone, but it needs to be done with your eyes wide open.
• 3:32
  Speaker 1: If you're considering it, talk to a mortgage advisor like me, talk to a lawyer and get everything in writing before you make any big moves, because in property like in life, clarity is kindness.
• 3:44
  Speaker 1: That's it for today's episode of that Home Loan Hub.
• 3:47
  Speaker 1: If you found this helpful, hit that follow button, share it with a friend or leave a quick review.
• 3:52
  Speaker 1: It means the world and helps more people make smart moves with money.
• 3:56
  Speaker 1: Until next time, stay informed and empowered.