Tips on how to buy property with your sibling
Buying property in Australia has become a growing obstacle for many first time home buyers. That’s why so many Aussies now consider buying with a family member, CommBank research shows.
The research found that the driving factor for those looking to buy with members of their family was improved affordability. Another factor was the possibility of “buying a bigger/better property and spreading the financial risk if anything went wrong.”
High property prices call for a better strategy
With the national average cost of a home sitting at $719,209, many first-timers are looking for new ways, such as teaming up, to get their foot in the property market door. This includes buying with their parents, siblings or even friends.
There is no law that you need to buy a home with a partner, but after crunching some numbers, we see that buying with someone else can help to make the task slightly more affordable.
Currently the average home loan size for owner-occupied dwellings nationally is at $574,000, according to the Australian Bureau of Statistics (ABS). Having two or maybe even three people involved in paying a loan that size could make the monthly repayments far more manageable.
Mirabel and Tomas are siblings and recently decided to buy a house together. According to Mozo’s database the average monthly repayment is $1,712. That means the monthly repayments split between the siblings is $856 each. Clearly a split payment of this kind makes the task more manageable.
Buying property with your sibling follows all the same buying a home steps as if you were buying by yourself or with a spouse. Overall nothing changes, except the fact that you’d be moving out of home with your sibling - so best that you get along!
Benefits of buying property with your sibling
Of course, buying together means splitting all the costs together, not just monthly repayments. This includes: the deposit, maintenance and property management bills, local council fees, house insurance and so on.
It also means sharing a joint home loan responsibility. While lenders don’t change their requirements when it comes to who is on the deed, keep in mind that buying a house is a big financial decision. And sometimes relationships may become strained when dealing with such large sums of money.
Risks of buying property with your sibling
Living in a home you own with your sibling is not the same as living with your parents - even if it might seem so at glance. If one of you failed to meet the required repayments, you’d fall into default and that could hurt the whole endeavour.
It’s important to have clear written rules between everyone involved to avoid problems down the road.
If you are thinking about buying a home soon, check out Mozo’s first time buyer guides to get you prepared for the home buying journey you are about to take.
Home loan comparisons on Mozo
-
Fixed Home Loan
- Owner Occupier
- Principal & Interest
- LVR <95%
Go to site- Interest rate
-
5.69
%
p.a.
Fixed 3 years
- Comparison rate
-
6.28
%
p.a.
- Initial monthly repayment
-
$4,174
Get the security of a competitive fixed rate home loan for 2 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.
- interest rate
-
1 year - 6.19% p.a. (6.45% p.a.*)
2 years - 5.69% p.a. (6.34% p.a.*)
3 years - 5.69% p.a. (6.28% p.a.*)
4 years - 5.89% p.a. (6.30% p.a.*)
5 years - 5.89% p.a. (6.27% p.a.*)
- Fixed loan revert rate
-
6.34% p.a.
- Upfront fees
-
$799
- Ongoing fees
-
$6.00 monthly
- Discharge Fee
-
$350.00
- Package
-
-
- Maximum loan to value ratio
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95.00%
- minimum borrowing amount
-
$10,000
- maximum borrowing amount
-
$5,000,000
- type of mortgage
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Fixed
- Repayment types
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Principal & Interest
- Availability
-
Owner Occupier
- Repayment options
-
$4,174
- Extra repayments
-
yes - free up to 1 year in advance
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$500.00
- Offset account
-
no
- Split account
-
yes
- Other restrictions
-
Monthly fee only applies to fixed period of loan.
- Other benefits
-
-
- Special Offers
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$4,000 cashback for loans $750,000 and above with a maximum LVR of 80%, settled within 90 days of application for refinancers or 180 for purchase loans. $3,000 for loans between $500k and $749k, $2,000 for loans between $250k and $499k.
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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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