Sibling co-financing on the rise- but at what cost?

by Mackenzie McCarty30 Jan 2013

Siblings who purchase together now make up 10% of traffic at open houses and inspections, according to a News Ltd story published yesterday – but whether or not this is a positive sign is up for debate.

Real estate agents argue that the trend, which has grown over the past three months, allows buyers to afford properties that would otherwise be beyond their financial reach.

Agent Silvia Vitale of Laing + Simmons Potts Point told News Ltd that sometimes this is the only way siblings can afford to break into the property market and says most do it for investment reasons.

But Gold Coast mortgage broker, Heather Nyssen, says not only has she not witnessed an increase in sibling home loan applications – she openly discourages it.

“They’re usually quite young and their life paths diverge after a few years. In some cases they buy it so one or other can live in it, or they buy as an investment property, but they often end up in a bad position.”

Nyssen says major life decisions like weddings and having children then have to be put on hold, because one or both of the siblings is tied to a poor investment decision made when their personal circumstances were different – and that can lead to awkward moments at family get-togethers, to say the least.

But Forsyth Real Estate principal, James Snodgrass, told News Ltd that getting a mortgage with siblings can help would-be buyers ‘escape the rental trap’.

"For young families trying to get some equity to buy their own property, life can be hard. So what they're doing is teaming together with two to three other parties.''


  • by Derek Miles 30/01/2013 10:24:57 AM

    This is where the broker has a responsible role. The broker should spend time having the conversation with the siblings about their futures, and the advantages and pitfalls of joint ownership. The practice shouldn't be discounted out of hand because the arrangement can work for some families. It is a matter of being informed about the possible costs and disadvantages if any.

  • by Broker 30/01/2013 10:42:02 AM

    I tend to find that any enquiries re this type of structure come well equipped knowledge wise, their parents aren’t stupid and they already know the potential pitfalls.

    As a Broker I am not a Mother or a Nanny , but yes I will briefly explain the basics in the interest of business professionalism, basic decency and common sense , NCCP has not changed my view on this one iota

  • by Fraught with danger 30/01/2013 12:04:55 PM

    Sibling purchases, parents buying for children, when younger, etc, etc.
    Short term, great solution. Long term, fraught with danger. Capital gains implications, Stamp duty transfers. Elderly parents now the owner of an additional property that can impact on pensions, & healthcare entitlements.
    Strongly advise & recommend, proceed with EXTREME CAUTION. As the broker with the new Credit act. Who is to say this will not come back & bite you, if you have not discussed, all potential issues, or recommended they have addtional Financial Advice, to nullify your position. Would need to clearly show notes & have a letter confirming ALL potential "current" & "known" future issues discussed. Think I am kidding. Wait until it happens, when someone decides to sue.
    Good Luck.