If you’re a single person who has decided to jump into the property market, but at the moment your salary doesn’t quite make the bank minimum for the house you have in mind, don’t worry – there is a way you still become a homeowner!
If you join forces with a member of your family or a friend, you can combine your incomes and get your foot on that property ladder. Make sure you and your buying partner are both aware of the long-term nature of signing on a house together. One person can’t change their mind a few months into the purchase, once everything has been signed!
.However, this arrangement works very well for people who are aware of the following points.
1. Discuss your expectations before buying
Whether you get a joint bond with your parents, or another family member, or a friend; it’s important to decide how you will handle the asset.
For example, if your parents have bought jointly with you, are they expecting a return on their investment? If it is two friends buying for investment purposes, what is the timeline?
2. Decide who will occupy the property
If both owners are living in the property, it’s best to be sure of what will happen if one moves out. Will they be responsible for getting a tenant? What should the rent be?
Remember that both partners will still need to pay the bond, even if one is not living in the property.
If you are renting it out, you might need to put in more money over and above the rental amount, especially in the first few years as rental won’t cover all the expenses.
3. Looking after the property
Properties need to be maintained and kept in good condition. Both partners should be responsible for dealing with the tenants, and any property maintenance issues - like flooding geysers, painting, etc. These things happen in all properties over time.
Agree up front who will deal with what issues, and what money should be spent.
4. Changing circumstances
Life is constantly changing for all of us. For a partnership who owns a home together, this could mean that someone could move to a different area, or maybe get married and want to live in their own property. Remember that the bank will take your joint ownership into consideration if you are looking at a different property.
You need to decide early on in your partnership whether one person should maybe pay the full bond, and draw up a contract of ownership.
5. Paying over the bond amount
If you are both paying the bond, maybe one partner loses their job and is unable to uphold their payments. How will you handle this?
It’s a good idea to pay a bit more into the bond from the beginning. This will give you time to work on a solution if you need to.
6. Selling the house
You must decide what will happen if you both want to sell and get the capital out, or if one partner wants to keep the property. If one person wants to keep the property, you can draw up a new contract with the bank.
You will need to agree to an appropriate price if selling to one of the partners. An estate agent can help you with this, as there will be attorney and transfer costs.
7. Have a contract
Both parties should sign a contract with all the above points considered. This will make life less complicated down the line.