Al­ter­na­tive ways to get into the prop­erty mar­ket

Con­sumer tips .... pro­vided by REIQ

Whitsunday Times - - DOMAIN -

Co-buy­ing

Co-buy­ing – also known as shared own­er­ship, joint own­er­ship or co-own­er­ship – is when two or more peo­ple de­cide to spread the fi­nan­cial bur­den and buy a prop­erty to­gether. Par­ents are buy­ing with their chil­dren, sib­lings are buy­ing to­gether, as are friends, ex­tended fam­ily mem­bers, even col­leagues.

By join­ing forces, you can af­ford some­where big­ger, bet­ter and sooner than you could alone.

For in­vestors, the ob­vi­ous ad­van­tages in­clude the re­duc­tion in cap­i­tal re­quired, the re­duc­tion in other as­so­ci­ated costs in­volved in buy­ing a prop­erty and, as a re­sult, the re­duced risk, es­pe­cially when bet­ter lo­ca­tions can be made more ac­ces­si­ble.

“It is im­por­tant to re­mem­ber that a mort­gage mate, a co-buyer or a co-in­vestor is in essence a part­ner. There are sig­nif­i­cant le­gal and fi­nan­cial obli­ga­tions to con­sider and plenty of due dili­gence is called for,” REIQ man­ag­ing di­rec­tor Dan Molloy said.

“It is vi­tal that all par­ties have the same in­ten­tions and goals and a legally pre­pared doc­u­ment – such as a Deed of Trust – is ad­vis­able for any­one en­ter­ing into a co-buy­ing ar­range­ment.”

Mum and dad fi­nance

Baby boomer par­ents are in­creas­ingly help­ing their chil­dren into the prop­erty mar­ket. Cre­ative ways they are giv­ing their chil­dren a “leg up” in­clude co-buy­ing where the par­ent(s) pro­vide the eq­uity and the chil­dren take re­spon­si­bil­ity for pay­ing the debt.

The other ar­range­ment is by way of a guaran-

“It is im­por­tant to re­mem­ber that a mort­gage mate, a co-buyer or a co-in­vestor is in essence a part­ner. There are sig­nif­i­cant le­gal and fi­nan­cial obli­ga­tions to con­sider and plenty of due dili­gence is called for” - REIQ man­ag­ing di­rec­tor Dan Molloy

tee. The tra­di­tional bank guar­an­tee has been re­placed by a prod­uct that al­lows a par­ent to guar­an­tee an amount to sup­ple­ment the bor­rower’s de­posit.

The size of the guar­an­tee can be limited to a spe­cific amount which pro­tects the par­ent from los­ing their home should the child de­fault on the loan.

“De­clin­ing hous­ing af­ford­abil­ity has made it in­creas­ingly dif­fi­cult for first home buy­ers, how­ever op­por­tu­ni­ties cur­rently ex­ist for buy­ers who can af­ford to en­ter the mar­ket,” Mr Molloy said.

“The REIQ en­cour­ages any­one who can af­ford it to buy prop­erty to se­cure their long-term fu­ture. How­ever, they must be able to af­ford the prop­erty and the on­go­ing costs.”

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