First homebuyers are increasingly partnering up to buy property.
New research from Mortgage Choice has revealed that up to two-thirds of first homebuyers planning to purchase within the next year will not be buying on their own. The company pointed to a trend of de facto couples friends, relatives and even work colleagues partnering together to afford property.
"Sharing a home loan commitment with one or more people provides borrowers with the opportunity to split the cost of the property and the associated expenses, so that loan repayments are noticeably less than what they would be if they were buying solo. Another benefit is if the combined funds equate to a deposit of 20% or more of the purchase price, it will negate the need for lenders’ mortgage insurance," company spokesperson Belinda Williamson said.
Co-ownership agreements were "not all that different" from traditional borrowing assessments according to Mortgage Choice, but the brokerage pointed out that if borrowers are not a couple, some lenders may assess the loan based on higher individual living costs. Williamson urged borrowers considering the arrangement to put agreements in writing.
"Clearly putting the ground rules in place from the start, preferably with the assistance of a solicitor drawing up a formal agreement, will go a long way to ensure all parties acknowledge their responsibilities and agree on unexpected contingencies," she said.
FHB figures inflated by buyer rush