Investing with someone else can get you into the market a lot sooner than flying solo. By joining forces with a family member or friend, you’ll have a larger deposit, share mortgage repayments and split maintenance costs.
But these advantages need to be counterbalanced with the risks.
Falling out with your co-investor could mean you need to sell the property at an inopportune time and lose out on potential capital growth. More importantly, financial differences could damage a valued relationship.
To avoid this scenario, it’s essential to ensure your fellow investor shares your investment goals and can fulfil their financial obligations.
This includes discussing how long you both want to invest for, when you want to sell and how much money each of you can contribute to the deposit and loan repayments.
If you can see eye-to-eye on these issues and amicably negotiate any sticking points, your joint venture has every chance of success.
When it comes to researching your loan options, it’s a relief to know that co-owners can can get into property in the same way couples can. Just like other investors, it pays to research the lending market to find a loan that’s right for both of you.
ME offers flexible home loans at competitive rates. Their Basic Home Loan features a competitive variable rate, have free redraw facilities and all loans are free from account-keeping and application fees.
ME’s Basic Home Loan also lets you borrow up to 95 per cent of the property valuation.
But before signing the financial paperwork, it’s a good idea to seek legal advice on the structure of your co-ownership agreement. A lawyer can advise you whether it’s best to set up the property as Tenants in Common or Joint Tenants.
Under a Tenants in Common structure, each person has a share of the property. The shares reflect how much the co-owners contribute to the purchase of the property. This agreement is commonly used for investment property.
Joint tenants have equal ownership of the property with no owner having a larger share than the other. If one owner dies their share of the property is automatically transferred to the other owner. This model is more commonly used by married or de facto couples.
To explore your choices with ME, check out their home loans calculators.
This content was sponsored by ME Bank. Comparison Rate based on a loan of $150,000 for a term of 25 years. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Terms, conditions, fees and charges apply. Applications are subject to credit approval. For more information, go to mebank.com.au or click the logo below: