Have You Considered Co-Purchasing A Home?
As property values continue to soar, with little to no sign of slowing down, the dream of homeownership is becoming increasingly elusive for some people. We’ve touched on this subject before when talking about the challenges that many buyers are facing in this market. Whether it’s having to adjust expectations and make compromises, or turn to parents to help with the financial side of things, it’s obvious that the real estate landscape is changing, and more creative solutions are required.
An emerging trend we’re beginning to see is that of co-purchasing, or buying a property with other family members or friends. Recent surveys have indicated that nearly a third of Canadians would consider co-buying a home, and some lenders in this country have caught on and created “family or friends mortgage guides” to help people better understand the process. Up to four names can be on a property’s title.
We understand that this option isn’t for everybody, but many buyers, and even existing homeowners, are beginning to look at this as a viable option for a variety of reasons. Here are some examples of different profiles where the advantages to be gained by co-purchasing might outweigh the disadvantages.
This could be any number of profiles. For example, let’s imagine a young, single professional who’s saved up a fair amount of money and who’s sick of living with their parents, but still can’t afford to buy on their own, and are considering renting their first apartment with some roommates. Why rent with your friends when you can own? Renting for a year or more does not build you any equity in a property. In fact, the amount you spend renting for a year could equate to a down payment. If you are planning to move out of your family home, owning is the best option, even if you do it with someone else. Teaming up with a friend who is in a similar situation and buying a property together could be a great way to get one’s foot on the first rung of the property ownership ladder.
Young families might also fit this profile, because the barriers to entry prevent them from buying on their own, but by partnering with another family they could potentially afford to share ownership of a home and all the maintenance costs associated with it.
Co-purchasing could be a great solution for many single parents. Not only would it reduce the financial burden, but it could also be an opportunity for them to lean on each other for support when it comes to household responsibilities such as childcare, meal prep, cleaning, and maintenance. It could take a load off of both parents and allow for a shared space raising and caring for the children.
Widows / Widowers
Many seniors who have lost their spouse find themselves living all alone in a big home, with nobody else to help with the property care and maintenance. In many cases, the widow or widower may not be ready to move into a senior’s residence and may still very much appreciate having their detached home with its own yard. Seniors are often on a fixed retirement income and current inflation rates and the rising cost of living are making it much more difficult for them to live within their means. Many are struggling to keep up with expenses. This could be a great opportunity to co-purchase a home as a group of two, or even three singles, and split the monthly expenses as well as the maintenance costs. It will also offer a sense of community and companionship while benefiting everyone financially. It was a good option for the Golden Girls!
Things to Think About
There is a lot to consider before getting into a co-purchasing agreement. First, you need to make sure that you go into this only with people you know and trust. There are many decisions that will need to be made together, so discussing a long-term vision and plan is important. You also need to ensure that you’re partnering with people who are dependable. For example, if you buy a house with two friends and one can’t pay their share, the burden falls on the other title holders.
It’s important to have something in writing that's notarized if the relationships go sour. Ensuring you have legal documentation specifying how the ownership would be divided should anyone want to move out. If all parties agree with the property purchase and plan, co-purchasing could be a great home ownership solution.
If you or someone you know would like to learn more about co-purchasing and how to begin your home buying journey, don’t hesitate to contact Team Broady at email@example.com or give us a call at 514-613-2988.