Research shows Aussies prefer to go it alone when purchasing a property
Despite Aussies loving their ‘mates’, 83.5% of us wouldn’t dream of purchasing a property with a friend, according to a survey released today by www.finder.com.au . And it seems Australians are also confused about taking the property plunge with their partner, as 49.8% think it’s a good idea while 50.3% think purchasing with a boyfriend or girlfriend is just too risky.
So, what are the key factors to take into account to make it a successful transaction?
Jeremy Cabral, Publisher of HomeLoanFinder.com.au says, “Purchasing a property is one of the biggest decisions a person will make in their lifetime. Buying with a partner or friend can be a great way to share the financial burden of a home loan, but it is crucial to research this option thoroughly and ensure that both parties are in agreement on the terms and conditions of this undertaking before moving forward. ”
When it comes to hesitations, 57.2% of respondents said they would worry that buying a place with a friend could ruin the friendship; whilst 26.3% simply wouldn’t trust a friend enough to make this high level commitment.
On the flipside, 46.8% believe it is a good idea to purchase a property with a partner if the relationship is stable and long term. 34.9% are of the more traditional belief that a couple should be married before stepping onto the property ladder together.
Mr. Cabral continues, “76.3% of those surveyed believe that now is a good time to buy a property. So if you’re planning to purchase with someone in 2013, the following tips will help ensure that you make an informed decision,”
1. Discuss and identify how you will share costs
Address key questions regarding the property in advance. Questions should include:
- Are you going to live with your partner/friend in this property?
- If you're going to rent it out, how will you be splitting the earnings?
- What is the ownership split of costs for the repayment based on the loan term?
You need to know all this before you make any final decisions. Be sure to also factor in costs such as stamp duty, taxes, bills and renovations.
2. Document an agreement
Even if you know the person really well, it’s best that you consider visiting a lawyer to document and agree on terms before entering. This will safeguard all of your interests in case circumstances change.
3. Do your research by doing a home loan comparison
When purchasing a property, don’t let your partner steer you into a home loan that doesn’t offer the best value. Be sure to do your research and don’t rush into it. Take your time to compare home loans.
4. Have an exit strategy
Think of the worst case scenario and all of the possible outcomes such as:
a) What if one of you dies or faces a serious illness or disability?
b) A change of employment and income?
c) Bankruptcy or changes in the property market?
d) You leave your partner / the friendship ends?
e) Selling the property at a loss (after fees and charges)?
Consider having an exit strategy of what you will do if things don’t work out as planned.
5. Specify tenants-in-common or joint-tenants on the title
‘Joint-tenants’ means that, after your death, the property will automatically transfer to your co-owner and not the close relatives specified in your estate. If you’d rather have your share of the property passed on to whomever you’ve nominated, be sure to specify ‘tenants-in-common’ instead.
“It is vital to take the time to research and plan the purchase of a property with someone else. There are grave repercussions if the agreement is entered into lightly and things don’t work out as planned. It’s often difficult to imagine a friendship or relationship breaking up, but this can and does happen so take into account every situation and plan accordingly for each to preserve your investment,” says Mr. Cabral.
For further details on purchasing a property with a partner or friend visit www.Finder.com.au
Written by Jeremy Cabral, Publisher of top home loan comparison website, www.finder.com.au, a free website which aims to help consumers make informed choices when selecting a home loan.