Should I buy a home with my mate?

Be very careful when you decide on friends buying or investing together, because due to the lack of an agreement between them, tensions flare and friendships can be destroyed.So, before we look at the money stuff, let’s look at the far more important friendship stuff. If you do buy together, you really should have a detailed and comprehensive written agreement.

You can buy a home as “tenants in common”. This is easy to do with your solicitor, who you would use to handle the purchase.

You and your friend could put in exactly the same amount and you each own 50% of the property, or you could put in different amounts. If your friend puts in 60% of the money, that friend could own 60% as a tenant in common and you could own 40%. This is a key thing you need to decide and put into your agreement.

Then you have quite a number of things you need to agree on and document. Some of these are factual.This would include: how do you share the costs of the property, such as insurance and rates, what maintenance plans do you have for whatever house you buy and how are those costs shared, what do you do if one of you wants to sell but not the other, what happens if one of you falls ill or, in an extreme event, dies?

Yes, a lot of this is pretty horrible stuff. But I have learnt over the past 30 years an important money rule: if you plan for the worst, it rarely happens.

So have a good, solid, written agreement. Your solicitor could be involved here, at least to make sure it is correctly signed. You don’t need legal mumbo jumbo; this would be a commonsense agreement.

Then there are the ‘living together’ issues. These are more personal: things such as who gets a bigger bedroom, splitting food costs and the usual day-to-day stuff. These don’t really need to be in an agreement, but should be discussed. In a way, this is the hardest part of buying a home together.

I always enjoy learning about money ideas, and their concept of helping people to ‘find a new mate’ to buy with is an interesting, if somewhat terrifying, concept. It is worth reading their tips about co-owning. I think you will find that helpful.

But in terms of a mortgage, I want you to go for the cheapest on offer. Now is the time to talk to talk to us so we can recommend a lender who is interested in these types of mortgages (CBA & ING are good at this). There is no point going any further until you find out exactly how much you can borrow, this is where we can help.

If you and your friend put the effort into how a purchase could work for you both and document this, you maximise your chances of a successful purchase.

Most importantly, you also set the framework to maintain what is obviously an important friendship.

About the author

Matt Carra

Matt Carra

Matt Carra is the Owner of Blue Key Finance, a Finance Broker since 2004, an SMSF Lending Specialist, a Property Investment Educator, and a Mentor to new Finance Brokers entering the finance industry. Matt is passionate about providing valuable guidance and honest advice, educating Australians on how to buy their first homes and invest successfully while protecting them with knowledge. Matt has strong long-term relationships with his panel of lenders and extensive knowledge on their credit policies, and utilises that skillset to give you peace of mind by recommending you to the right lender the first time, to negotiate a better deal, and to fight for your cause – that’s Matt’s commitment to you. Contact Matt today to start the conversation on 0425 726 538 or email matt.carra@bluekeyfinance.com.au


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