How would you like to double your deposit and double your income to buy your first property? Sounds pretty good doesn’t it? That’s the reason why many young homebuyers are now working together with a partner, friend or relative to break into the property market.
Although there are some excellent benefits to entering a property partnership, there are some pretty nasty horror stories out there too – so you need to make sure you protect yourself against the worst.
Make sure you have similar goals for your property purchase.
Do you both agree on how long you would like to keep the property for? Do you want to rent it out, or will you be living there together? Make sure everyone is on the same page before you enter into any contracts.
Buy with someone who is at a similar stage in life.
If you buy with a family member who has a baby on the way, you might be asking for trouble. Likewise, buying with a sibling who is too young to appreciate the importance of keeping up financial commitments could be just as much of a recipe for disaster.
Take a moment to check your financial compatibility.
You will be responsible for the loan if the other party becomes unable to pay, so take the time to have some open discussions about money, and make sure you are both equally committed to paying things on time and keeping track of the bills.
Decide if you want to be housemates.
If you plan to live together in the home, make sure you both agree about things that could cause arguments such as having pets in the house, allowing partners to sleep over, housework and other potentially touchy subjects.
Get Legal Advice.
Find out about your options legally if something was to go wrong, and decide whether you want to be Joint Tenants, or Tenants in Common. This might depend on whether you will pay an equal share of the deposit and loan repayments.
Create a formal agreement.
Get a formal agreement drawn up that covers as many issues as you can think of. Hopefully you won’t have any problems, but it might be helpful if you already agree on the solution ahead of time.
Property partnerships can turn into nasty legal battles when parties don’t agree on important issues, such as whether or not to sell the property. If you can thrash out some of these issues now you will save yourself a lot of worry in the future.
Keep records of spending.
Make sure you keep it even and try to keep records of who paid for what, just in case you have problems down the track.
Hopefully your property partnership will be a very positive experience, and if you follow these steps you should be well on your way to being a great team.