The pros and cons of buying your first home with family

Many first homebuyers are turning to smart strategies to get a toehold in the market – and one growing trend is for first timers to team up with friends and family to purchase a property jointly.

But just like an episode of Family Feud, the dynamic can lead to big wins or tears – so it’s important to know the risks and rewards first.

There are compelling benefits

Co-buying certainly offers valuable advantages. By pooling financial resources, buyers enjoy far greater purchasing power. This can mean being able to afford a better quality home or a more desirable location, thereby enhancing the prospect of healthy long-term capital gains.

Pool your savings

With greater combined savings, co-buyers are also better placed to avoid lenders mortgage insurance – a cost that can run into thousands of dollars for buyers with a deposit of less than 20%.

Split the bills and maintenance costs

And of course, buying with another person means being able to share the burden of ongoing bills for home maintenance, rates and insurance. It can all add up to a more positive, less financially stressful home owning experience.

It’s worth noting that these upsides don’t just apply to first homebuyers. Investors can benefit from co-buying, too.

Weigh up the possible downsides

Along with the pluses, co-buying can have drawbacks. For first homebuyers it may mean sacrificing government concessions, so it’s worth crunching the numbers to check that co-buying leaves you better off overall.

Plan for the future

In addition, every buyer needs to have a clear understanding of how things will work. What happens, for example, if a partner comes on the scene, or one owner wants to sell up? By thinking of your personal goals over the next few years you can discuss any potential lifestyle changes that may affect the agreement.

Put it in writing

Rather than simply hoping it will all work out, it makes sense for co-buyers to have a formal co-ownership agreement drafted by a solicitor. This will set out in writing how different scenarios will be handled by the parties involved.

With property values remaining strong, the trend of co-buying looks set to gain momentum. It could be just the solution that allows young buyers to climb the property ladder while bringing families and friends closer together. If you’d like to talk to a home-buying professional, book a time with a ME Mobile Banker to see of co-buying is the right investment strategy for you.