The lending industry is responding to social changes in property buying. As prices continue to rise, first home-buyers are increasingly looking for novel ways to get started. Lenders have now established a class of home loan specifically for buying a property with friends. The new style of loan enables pooling of money with friends, or family, without the usual shared risk for the entire loan.
Previously, even if friends purchased a home together as tenants-in-common, with separate loans, they would be required to guarantee each other’s loan and therefore were liable for the entire loan.
The new ‘property sharing’ loan, allows the cost of the home to be split anyway that suits, and each party is able to decide how they want to manage their repayments. Their loans are individual, rather than joint, with the usual access to redraw or offset accounts.
Each borrower must be an owner of the property (no third-party guarantors) and show they can repay their portion of the home loan.
In some cases co-purchasers opt to draw up legal agreements setting out expectations in the case of one individual wanting to sell out of the property.
If you’d like to know more about the details of this ‘property sharing’ loan, please give me a call on (02) 9908 9888.
Patricia Williams is a credit representative (400458) of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237).