Smart thinking on home ownership
Property lawyer
their own.
Most people are aware that they can use a portion of their KiwiSaver balance to contribute towards the deposit required for their first home, but may not know that it is possible for more than one person to use their KiwiSaver to buy the same home.
You may not have a sufficient deposit or income to purchase a property on your own, but if you combine it with your flatmates, family or friends, home ownership could become a possibility.
Another option to purchase your first home may be a helping hand from your parents through a gift, loan guarantee to the bank or by purchasing the property with you.
Banks prefer for funds advanced from parents to be a gift rather than a loan, although they will consider a loan if the terms and conditions are satisfactory to your bank.
Either way, the advance will need to be documented by way of a deed of gift or an acknowledgement of debt.
A guarantee from your parents may give you the ability to purchase the property without a cash injection from your parents.
There is considerably more risk to your parents providing a guarantee however, as the bank would look to your parents to repay the debt should you default on your obligations to the bank.
As above, purchasing a property with other people, such as your parents, can be a good option.
Under a joint purchase, the title to the property would be in the names of all owners as tenants in common in separate shares, with such shares able to be equal or unequal depending on the circumstances.
This option provides some security and potential capital gain return for all parties.
Under any joint ownership arrangement, it is essential that a property sharing agreement be completed.
This agreement would record the terms of the purchase, who will pay for outgoings, repairs and maintenance, management of the property, what happens if one party fails to perform their obligations and, most importantly, an exit strategy – for example, if one party wants to sell but the others don’t.
In any of the above scenarios it will always be important for all parties to obtain their own legal advice at the outset.
-Hayley Willers is a property law specialist and Associate of law firm DTI Lawyers. Email hayley@dtilawyers.co.nz or phone 07 834 7712 www.dtilawyers.co.nz