An increasing number of first home buyers, second time home buyers or property investors are buying property in Joint Names, Tenants In Common or co-ownership by pooling their deposits, finances and resources with friends, family, de facto or compatible business structures. The main benefit of buying a property in a co-ownership may provide you or your co-purchasers with the means to enter the property market earlier than later or only being able to purchase a small apartment, to purchase a better quality or higher value property.
However, if you choose this co-purchaser option you may need to consider the following:
Further to the above paragraph, the benefits of buying or purchasing a property in joint names, are;
Similar to purchasing a property in joint names, the benefits are the same as above, are:
It is important to understand that these co-purchase options have different legal ramifications for each purchaser and borrower against the loan.
For example, a Joint Tenants purchase is usually done with married couples or parent and child and if one person dies the rights to the property are assigned to the other joint tenant.
For example, a Tenants in common purchase are undertaken for investment purposes, as each investor has a share, each may be entitled to sell off their share as one would in owning shares in a company.
Each person has the right to Sell, Lease or Mortgage their share of the property without an agreement from the other shareholders, however, if a lender has a Mortgage over the security the incoming shareholder would need to be a party to the loan or mortgage and show beneficial interest
Securing your long-term financial security is very important therefore we would recommend that you seek the right legal advice since each purchaser financial commitments are different and a well-designed co-ownership agreement or contract would set out the rights and responsibilities of each purchaser or owner.
When you buy a property together you become co-borrowers on the same mortgage, which means that each borrower is “jointly and severally liable” for the home loan. This means that if one person defaults on the home loan, the other person/s listed on the mortgage will be held responsible.
A good Co-Ownership contract should include the following;
When buying a property with someone else, you will still be able to receive the First Home Owners Grant (FHOG) if all co-purchasers on the mortgage are eligible to receive the FHOG. If one of the co-borrowers has owned a property prior then the other joint purchaser may not be eligible, therefore we suggest you seek legal advice or contact your local Office of State Revenue. Read more about the eligibility requirements for the First Home Owner Grant.
Should you require further legal information we recommend to discuss these options with your solicitor or conveyancer.