How to team up to buy property with your friends
With housing prices skyrocketing in all the capital cities in Australia, it’s safe to assume that buying a house by yourself won’t happen. So maybe you could start by daydreaming about teaming up with your friends.
Believe it or not, you can buy property with anyone, it doesn’t necessarily need to be a romantic partner. You can buy a house with your sibling, your uni best friend, even your high school ex (but why would you buy with an ex?).
The benefits of buying property together
By teaming up with someone, or a group of friends you’ll have your foot in the property market sooner rather than later.
You will also be able to split the costs that come with owning a house. This includes: the deposit, monthly repayments, maintenance and property management bills, local council fees, house insurance and so on. Buying together may also allow you to purchase a bigger home or in a better area.
When it comes to a home loan application, typically lenders do not change their requirements when there are multiple people on the deed. As a group, you’ll need to take the usual steps that come with purchasing a new home.
This includes:
- A deposit
- Applications to possible grants
- Getting your credit rates checked
- Having proof of income
- Getting your debt in order
The risks of buying property together
It is easy to forget that friendships may become strained when dealing with huge amounts of money. While joint ownership is quite common in the housing market, the more people that get involved, the more problems you may face.
An example of this is if one of your friends changes careers or loses their job and can no longer afford to make the repayments. Who will become liable for making those extra payments so you don’t fall into default? Or what if your friends get a job in a different city and want to sell their share of the home? Who will be responsible for buying out their share? Will you and your other friends on the deed be able to afford losing someone from the ownership?
When you buy property with a group of people, you also end up owning less of the house’s equity.
There are lots of possibilities to consider when it comes to co-ownership, so it shouldn’t be a decision made on a whim.
Other risks include:
- Whether to refinance
- How to split income and costs associated with the house
- Selling the property in the future
- Will you share a loan or have a split loan
Figure out your mortgage structure
Just because you are co-owning a home with your mates that may not necessarily mean that everyone will have equal shares of the property. It is entirely possible that not everyone on the deed may even live in the property. That’s why it is important to figure out what sort of ownership structure you will have
Joint Tenancy
In a joint tenancy, everyone has an even share of the property and if someone dies the surviving friends absorb full ownership of that share. While at a glance this structure seems like the most ideal and maybe even fair, in actuality it might make joint ownership a bit difficult if someone decides to go their separate way. In a joint tenancy, you don’t have the right to sell or transfer interest because you own the property as a group rather than a couple of individuals.
Tenancy in Common
This co-ownership structure is considered the most flexible because it allows two or more people to have a share of a property and be able to transfer their interest independently. It also allows you to own the property in equal or unequal shares. Later down the line, if someone wants to leave the co-ownership a tenancy in common makes it easier to split or sell your individual share.
Make sure to put your agreement in writing
There are several what ifs that come with property ownership, and having a legal document which dictates the rights and obligations of everyone in the co-ownership may save you potential trials and tribulations.
This agreement should include and explain:
- Who resides in the property?
- Who is responsible for the repayments and maintenance fees?
- What happens if someone dies?
- What happens if someone is unable to meet their share of the repayment?
- What if some becomes bankrupt, loses their job or income?
- What are the requirements to leave the co-ownership?
- Who is in charge of cleaning the toilets?
- Are pets allowed?
It might feel weird signing an agreement with your mates, but it’s better to be safe than sorry. Also, it could be a good thing to have in hand if anyone plays the “I didn’t know that” or “We didn’t agree to that” card.
While it might sound like fun and games to own a house with your best mates, it is important to remember that buying a house is a big financial responsibility. Buying a house together is very different from buying concert tickets together!
If you and your mates are in the market for a home loan, visit Mozo’s home loan comparison page to find the one that is right for all of you.
Home loan comparisons on Mozo
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Fixed Home Loan
- Owner Occupier
- Principal and Interest
- Interest rate
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5.54
%
p.a.
Fixed 2 years
- Comparison rate
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5.93
%
p.a.
- Initial monthly repayment
-
$2,852
Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.
- Interest rate
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5.54
%
p.a.
Fixed 2 years
- Comparison rate
-
5.93
%
p.a.
- Upfront fees
-
$495
- Ongoing fees
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$0.00
- Discharge fee
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$325.00
- Extra repayments
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- Redraw facility
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yes - free
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yes- optional with $10/month
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- 90.00%
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Unloan Variable
- Owner Occupier
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- Interest rate
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5.99
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Variable
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5.90
%
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- Initial monthly repayment
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$2,995
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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5.99
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5.90
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$0
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$0.00
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$0.00
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yes - free
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yes - free
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no
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- 80.00%
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- $10,000
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- $10,000,000
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Fixed Home Loan
- Owner Occupier
- Principal and Interest
- Interest rate
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5.54
%
p.a.
Fixed 2 years
- Comparison rate
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5.93
%
p.a.
- Initial monthly repayment
-
$2,852
Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.
- Interest rate
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5.54
%
p.a.
Fixed 2 years
- Comparison rate
-
5.93
%
p.a.
- Upfront fees
-
$495
- Ongoing fees
-
$0.00
- Discharge fee
-
$325.00
- Extra repayments
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- Redraw facility
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yes - free
- Offset account
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yes- optional with $10/month
- Maximum loan to value ratio
- 90.00%
- Minimum borrowing amount
- $50,000
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- $3,000,000
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Fixed Rate Home Loan
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5.59
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p.a.
Fixed 5 years
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6.27
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p.a.
- Initial monthly repayment
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$2,867
Get repayment certainty with HSBC’s low 2 Year Fixed Rate Home Loan. Make up to $10,000 of extra repayments a year. The option to split your home loan between fixed and variable. Plus, score $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 28 February 2023 and settle by 30 April 2023.
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5.59
%
p.a.
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6.27
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p.a.
- Upfront fees
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$0
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$390.00 yearly
- Discharge fee
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$300.00
- Extra repayments
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yes - free up to $10,000 p.a.
- Redraw facility
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no
- Offset account
-
no
- Maximum loan to value ratio
- 60.00%
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- $150,000
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2-Year Discounted - Simple Home Loan Variable
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5.54
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5.90
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$2,988
Enjoy a low variable rate with no application, ongoing or monthly fees to pay. Access your money via internet banking at any time with free redraws. Make additional repayments at any time. Available for owner occupied, investment and interest only repayments.
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5.54
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5.90
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$0
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$0.00
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$175.00
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yes - free
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yes - free
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no
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Variable Home Loan
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5.98
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6.02
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p.a.
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$2,991
Competitive variable rate on up to a 30 year loan term. No application fees to pay. Unlimited additional repayments. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.
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5.98
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6.02
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p.a.
- Upfront fees
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$495
- Ongoing fees
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$0.00
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$325.00
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yes - free
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yes- optional with $10/month
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- 90.00%
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- $50,000
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Unloan Variable
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5.99
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p.a.
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5.90
%
p.a.
- Initial monthly repayment
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$2,995
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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5.99
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p.a.
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5.90
%
p.a.
- Upfront fees
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$0
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$0.00
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$0.00
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yes - free
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yes - free
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no
- Maximum loan to value ratio
- 80.00%
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- $10,000
- Maximum borrowing amount
- $10,000,000
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Discounted Home Value Loan
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- Principal & Interest
- LVR <60%
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5.99
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5.99
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p.a.
- Initial monthly repayment
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$2,995
Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Receive $3,288 cashback when you refinance an existing home loan. Minimum loan amount of $250,000, settle within 120 days from applying.
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5.99
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5.99
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$0
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$0.00
- Discharge fee
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$300.00
- Extra repayments
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yes - free
- Redraw facility
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yes - free
- Offset account
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no
- Maximum loan to value ratio
- 60.00%
- Minimum borrowing amount
- $50,000
- Maximum borrowing amount
- $15,000,000
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Simple Home Loan Variable
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- Principal and Interest
- LVR<60%
- Interest rate
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5.99
%
p.a.
Variable
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5.99
%
p.a.
- Initial monthly repayment
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$2,995
Enjoy a low variable rate with no application, ongoing or monthly fees to pay. Access your money via internet banking at any time with free redraws. Make additional repayments at any time. Available for owner occupied, investment and interest only repayments.
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5.99
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p.a.
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5.99
%
p.a.
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$0
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$0.00
- Discharge fee
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$175.00
- Extra repayments
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yes - free
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yes - free
- Offset account
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no
- Maximum loan to value ratio
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- $150,000
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Fixed Rate
- Owner Occupier
- Principal & Interest
- <80% LVR
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5.99
%
p.a.
Fixed 3 years
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6.89
%
p.a.
- Initial monthly repayment
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$2,995
Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.
- Interest rate
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5.99
%
p.a.
Fixed 3 years
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6.89
%
p.a.
- Upfront fees
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$160
- Ongoing fees
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$0.00
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$160.00
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yes - free up to to lesser of 5% of original fixed loan amount, or $5,000 each year
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no
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Optional - $10 per month - 1 year fixed term only
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- $3,000 cashback for eligible First Home Buyers borrowing $250k+, $2,000 cashback when you refinance loans of $250k+, <80% LVR, settle within 180 days for first home buyers, 120 days for refinances. Excludes refinances from ANZ, ANZ Plus and Suncorp.
Read reviews and learn more about ANZ home loans
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Mortgage Simplifier
- LVR<80%
- Owner Occupier
- Principal & Interest
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6.14
%
p.a.
Variable
- Comparison rate
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6.17
%
p.a.
- Initial monthly repayment
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$3,043
Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.
- Interest rate
-
6.14
%
p.a.
Variable
- Comparison rate
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6.17
%
p.a.
- Upfront fees
-
$350
- Ongoing fees
-
$0.00
- Discharge fee
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$250.00
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Offset account
-
no
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $2,000,000
- Type of mortgage
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Elevate
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6.18
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p.a.
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6.18
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p.a.
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$3,056
Get competitive rates on loan terms of 5 to 30 years with the Aussie Elevate Home Loan. Structure your loan with up to five splits. Make additional repayments (T&Cs apply). Offset accounts available. Unlimited redraw using your online banking account. Choose from weekly, fortnightly or monthly payments For loan amounts from $10,000 to $5 million.
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6.18
%
p.a.
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6.18
%
p.a.
- Upfront fees
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$498
- Ongoing fees
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$0.00
- Discharge fee
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$325.00
- Extra repayments
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yes - free
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yes - free
- Offset account
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Optional extra - $10 per month
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $10,000
- Maximum borrowing amount
- $5,000,000
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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