Co-ownership is an option to consider if you can’t afford to buy a property outright on your own. It involves two or more people combining finances to pay the deposit and mortgage and it is becoming increasingly popular with the younger generation.

Some people use co-ownership as an option for purchasing an investment property while others use it to buy a home to live in, with them effectively paying ‘rent’ to the other party.

Whatever your reasons for considering co-ownership, it’s vital you take legal advice and have a co-ownership agreement in place. This agreement will state how much each person has put into the agreement and will set out the rights and obligations of each person with a share in the property.

It will also state how long the agreement is for and outline the implications if someone wants to leave the agreement early.

The Pros of Co-ownership

• You’re on the property ladder! You’re paying off a mortgage instead of paying rent or if you’re an investor, you’re enjoying the benefits of an investment property.
• With combined finances, you may have a larger budget to play with giving you a greater choice of properties to consider buying.
• Ongoing costs such as repairs and renovations are divided between the co-owners.
• All purchasing costs, legal fees, stamp duty, building reports are divided between the co-owners.
• With lower costs, you may find you’re able to pay your mortgage off quicker or have some money available for other ventures.
• You can still sell out whenever you want to, however there will be costs and legal implications.

The Cons

• There may be additional costs in setting up the co-ownership agreement.
• You are usually liable for the costs associated with the property – so if a party defaults on a payment, you will need to cover this payment.
• You may end up selling at a time you don’t want to if the other person’s financial situation changes.
• There may be additional costs if you want to leave the agreement early.
• Having a co-ownership agreement may have implications when seeking another loan.
• As you are in a financial agreement with another person or persons, if the financial situation changes for one person, your relationship may turn sour.

Property co-ownership is a good option and does work well for many people – but speak to the specialists first and make sure you have a good agreement in place to ensure all parties fully understand what they are committing to.

Whether it’s owning your own property or buying an investment, with over 40 years in real estate and property management, our talented team is constantly looking for new and innovative ways to help you realise your property dreams. This is why we are one of Newcastle’s longest established property management companies, so give us a call on 02 4956 9777 or pop into our  office for a chat.