Share Your Mortgage, Not Your Rent with Home Co-ownership
June 23, 2022
Buying your first home can be as daunting as it can be exciting. It is especially so when you are single and rely on a single income source. One can find themselves pondering over so many questions, doubts, and inhibitions like “Can I even afford a home alone? Can I get a mortgage by myself? How much down payment do I need to have ready?” Having questions and concerns are nothing but normal considering that buying a home is one of the biggest purchases one can make in their life. Fortunately, a little out of the box thinking and a mutually beneficial arrangement between two potential buyers can create a win-win situation for both. Share your mortgage, not your rent! Here’s how.
Home co-ownership or Joint Home Ownership
A co-ownership is the one of the rising trends given the increasing costs of homes as well as the overall cost of living. It has been gaining traction and popularity as commodity prices have increased, salaries have remained stagnant, and couples are choosing to get married later in life.
Home co-ownership or Co-buying can be the new innovative way to legally split the cost of a home, skip paying higher rent prices and to begin building equity.
What is Co-ownership or Co-buying?
Co-ownership of a property is when it is owned by more than one parties or people in a legally binding agreement stating the split of the cost, title of the property and other arrangements of the ownership in either of the following two ways:
- Tenancy in Common: This type of co-ownership offers more flexibility in the joint home ownership in terms of sharing the property. The proportion of the ownership can be adjusted and if one co-signer demises the property doesn’t automatically pass on to the other co-owner.
- Joint Tenancy with Right of Survivorship (JTWROS): In the Joint tenancy ownership, the share of the property is equally divided among the two owners. Also, in case one of the owners dies, the right of ownership passes on to the surviving owner. This type of ownership is commonly found in married couples or common-law partners.
Types of Co-ownership of property
There are two-ways of co-ownership or joint home ownership as explained below.
Occupant and Non-Occupant Co-ownership of Property
Co-owners of a home are not required to share the residence to be considered as owners of the property. A non-occupant co-owner can simply contribute financially by lending funds for down payment where the second co-owner handles the monthly mortgage payments.
Non-occupant co-owners can also be two or more parties or people interested in investing into the same real estate property. The costs of repair and maintenance as well as the profit from the investment might be split equally among the non-occupant co-owners.
Co-ownership Pros and Cons
- Home ownership can become affordable with the down payment and mortgage costs being split
- Other homeowner costs such as utilities and maintenance expenses are also equally split
- Allows you to enter the real estate market and start building equity while you are single
- You can buy a bigger house with more space when costs are shared
- Bound by a legal document, co-ownership predetermines the split of the assets
- Co-ownership agreements can be complicated. Both or all parties involved must agree on the arrangements
- All buyers should preferably have a similar credit score as the buyer with the lower score determines the interest rate
- If one co-owner goes bankrupt or fails to make payments; the burden of the monthly mortgage payments fall onto the second owner.
Things to Consider for Home Co-ownership
Home Co-ownership can be an advantageous option when you’re entering the real estate market while still single. There are, however, some key things to consider when co-buying a home such as the legal considerations of the entire arrangement. It is important to have all the costs of ownership and sharing of the common space nailed down before both parties agree and sign on the contract.
In addition to the legalities, one must also look for properties that can support the co-ownership scenario.
- A home that provides double primary suites with private ensuite to both the co-owners to avoid conflicts over space
- Double walk-in closets so that neither of the co-owners must compromise
- Homes under strata- the strata fees can be split to avoid conflicts over maintenance or yardwork around the home
Our Award-winning Townhomes in Copperstone provide all the above and can be the perfect first home for young co-homebuyers looking to buy their first home while being single!