2025 Guide: Buying property with other people – Not a spouse

Buying property with other people – Is it a thing?

Buying property with other people is not a new thing. Joint property ownership as a couple is the most common combo I see – but not what I am going to talk about in this article.

A quick aside though –people move quickly! I have seen romantic partners move to joint property ownership somewhere between leaving a spare toothbrush at each other’s and deciding if they are in this relationship-thing long term. Funny thing is that a house is a long term commitment!

Non-traditional partners like siblings, friends, and countless complex entities like trusts have shared property ownership for years.

What I am tackling in this article is the how buying property with other people who are not a romantic partner can bridge the affordability gap. My article will deal with different ownership combinations as they relate to home loans – let’s face it. Co-ownership is one thing, but co-ownership and home loan eligibility is something else. Things can be easier when a lender is not involved.

It is little wonder Australians are considering combining forces to buy property.
It does not seem to be getting any easier to buy a house. Whether you are single, coupled up or anything else. Home buying expectations and reality do not seem to be close—or closing. This gap is not bridgeable for many.

“…. buying property with other people can make the impossible possible.”

In the three and a half years to September 2023, ANZ and Corelogic reported a 15.6% rise in median household income. Compared to a 35.1% increase in median home values over the same period. Interestingly it is different story for units, they have risen 15.5% over the same period.

Aspiring property buyers are thinking outside the square.
A 2021 CBA study found around 25% of Australians have entertained purchasing property with partners outside the conventional scope, including parents, siblings, or friends.

Is buying property with other people worth it?

Buying property with other people can begin the ownership journey. This can be for a home to live in or perhaps an investment.

For some, buying property with other people can make the impossible possible.

For others would-be homeowners buying property with other people can greatly improve home ownership options.

Buying property with other people can overcome the hurdles to homeownership. ANZ and CoreLogic report it takes 10 years to save a 20% deposit for a median valued home – this ignores extra purchase costs like stamp duty

There are clear advantages to buying property with other people, but with co-ownership comes compromise.

In my mortgage broking experience, I have seen borrowers enjoy the following benefits from buying property with other people:

Earlier timeframe to purchase
Pooling savings can mean you could buy today. Co-ownership can improve you home loan eligibility.

Improve purchasing power
Savings and combined borrowing capacity can elevate your property buying budget.

Improved choice
Look at different types of properties in areas you might not have considered previously.

Reduced deposit
I have seen this work where one buyer has no deposit. A way of evening this up is the borrower taking out a bigger home loan that their co-owner.

Reduced buying costs
Stamp duty, agent fees and other purchasing costs shared.

Share of the home loan repayments
Your share of the joint home loan repayments can be in line with your contribution and share of ownership.

Reduced ongoing expenses
From replacing the hot water system to the ongoing strata fees – ongoing expenses shared.

Investment property strategy
This can be a first home or one to add to a portfolio. Joint property ownership can work well with an investment property strategy.

Property ownership combinations I see

If you are not buying a property solo, you are usually buying property with other people. Co-owners can be couples, singles, companies, businesses, trusts…. this list is a long one.

Based on my mortgage broking experience arranging home loans since 2008, I have listed some non-traditional ownership combinations I have advised on. These property ownership combinations are a small in number, compared to traditional joint ownership combinations. But for those involved, the property transactions were a significant event indeed.

Buying a house with a mate

Friends buying investment property together

Buying an investment property with a sibling

Kids and parents buying a house together

I am leaving off government shared equity schemes and other entities reserved for investment, like trusts.

How does buying property with other people work?

There is the factual – mathematical side to this.

Pool your savings. For the purposes of buying a property – pool what you can commit to cover deposit and purchase costs.

Get your home loan. Usually this will involve presenting your combined financial position for the purposes of a lending assessment.

Buy a property and live happily ever……. wait. For how long are we doing this?

…. Shouldn’t we talk about things first?

Don’t forget the not so clear soft side. The one that deals with the appropriateness of the arrangement, including compatibility of the proposed co-owners.

Do the goals, needs and objective for each owner align?

Are you on the same page as your potential co-owner?

Here are three areas you should be prepared to explore in the process of buying property with other people.

Is buying property with other people suited to you?

Start with you. For all the advantages buying property with other people offers, it is still a compromise compared to buying solo.

You can start by asking yourself these questions. A mortgage broker can take you through a fact find and needs analysis to help you identify an ideal pathway forward. Initial questioning can help with the following:

Your goals and objectives

• Why do you want to buy a property?
• Are you thinking of living in the property or is it for investment?
• What type of property?
• Location?
• What level of commitment/repayments are you comfortable with?
• Is your income reliable?
• How long do you plan on being in the property?
• What do you plan to do at the end of this period – rent it out or sell?

Can you achieve what you want by yourself?

• Mortgage brokers can educate you around how much deposit you need for a house.
• Mortgage brokers can also investigate access to government grants, shared equity schemes, guarantor home loans that can enable home ownership sooner.

Would you consider a compromise in your goals and objectives?

• Buying in a different area might get you a property on your own.

How would buying property with other people help?

• This is your chance to explore the benfits of co-ownership as they might apply to you.

Pre-purchase discussion points for buying property with other people

Once you have determined buying property with other people is the right path for you. Find a potential co-owner and have a discussion.

A pre-purchase discussion can give the co-ownership concept life – or kill the deal.

1. Aligned?
   Do our goals and objectives align?

• What type of property will work – is it just somewhere to live? Is there an investment angle?
• How long are you in this for?
• Are we willing to share (potentially) financial information?
• How will you seek comfort in each other’s ability to continue to meet their financial commitments.
• Are buyers willing to spend money on professional advice? Legal, tax, financial?
  This is not always a requirement, but I consider it a worthwhile expense.

2. Financial
   Mortgage brokers have these discussions day in day out for borrowers. Work with a mortgage broker early in your journey.

• Combined savings.
  What is available for the purchase? They do not necessarily need to be equal amounts.
  
• Home loan affordability for each.
  What can you borrow together and individually?
  
• Check credit worthiness of each borrower.
  Understand the difference between guarantor and co-borrower.
  
• Understand implications of defaulting on repayments.
  This can puts an obligation to repay on other owners – otherwise the property may need to be sold.
  
• Insurances – Unexpected life events can affect your capacity to repay your home loan. Financial advisers can help here.

3. Ownership structure
   There are two common ways to own a share of a property.

• Joint tenants
  Common in most traditional partnerships. Ownership is considered equal. If one owner dies the other owner takes on ownership of the property.
  
• Tenants in common
  This can be equal or unequal ownership shares. The key difference here in that if one owner does their share reverts to their estate. A written agreement is key here.

4. MUST understand these:
   Go into any co-ownership arrangement with eyes wide open. As much as you are considering this for your future, don’t let it trip you up down the line.

• Government grants and incentives
  How could co-ownership help or hinder access to these now and in the future?
  
• Future borrowing capacity
  Joint home loans can hinder future borrowing options. I have circumvented this for borrowers using a property share home loan structure. Though not suitable for everyone, a mortgage broker can advise on this.
  

If this idea of buying with someone else still has appeal, then take your momentum to a mortgage broker.

The “what ifs”
Discuss how to navigate some potential “what ifs.” This can be a tough but necessary discussion that can potentially put an end to the proposal before it has started. Or give it momentum knowing that some difficult scenarios have already been explored.

Fallout prevention checklist for joint property ownership

Here is a checklist if have created based on 15 years mortgage broking. I have been part of these discussion. I have also seen the fallout from borrowers wishing they had better upfront discussions.

Housemate agreements and joint property ownership can be two different things – though a link is clear to see. From major to minor – fallouts stem can stem from the unexpected – but there are events we know to discuss upfront.

FALLOUT PREVENTION CHECKLIST
Agree how you would deal with the following and whether it would affect your shared property ownership?

• Equal or unequal shares – if you have different deposits, ownership can still be 50:50
• Minimum holding period.
• Cannot meet home loan repayments.
• Moving out.
• New romantic partner moves in.
• Go away for a long period – travel, work.
• Improving or just maintaining this property?
• Financing minor and major repairs.
• Who is responsible for what? Maintenance, admin, ongoing house related costs, etc.
• Not paying share of ongoing house costs?
• Room sharing
• Getting out of the arrangement – exit strategies.
• Want to sell share.
• Deciding property value if one sells to the other.
• What sort of insurances should we consider? For the house and for ourselves?
• Are borrowers open to refinancing?
• Advice – Financial and tax advice.
• Advice – Legal advice and an agreement is recommended. How will disputes be solved?

What happens after buying property with someone else?

I have helped loads of people into property ownership. I have put together a series of articles detailing co-ownership combinations I helped into property. These real case studies explore how it began in in some situations, how it ended.

When friends fallout
Mates bought with a minimal deposit and joint home loan. It started off well but soon a disagreement led to the co-ownership no longer being viable.
To the borrower’s credit, they came to an agreement. One bought the other out and everyone moved on. Link to article

When mates move on
New partner, new family, new country.
When mates move on, having a property and loan can hinder future plans. I had a call from one borrower who was now overseas and found that owing an Australian investment property was hindering his borrowing options with his new family.
Link to article

When siblings want to use equity
I have helped many siblings buy a property together.
In time they can gain valuable equity.
Using equity to buy another property is helpful when buying again with the same sibling. If not, access to equity can be restricted.
Link to article

When parents have done their time
Every investment has a timeline. This example was shows how parents helped kids and all owners benefited. But this investment ran its course. Parents wanted out and the kids needed to act to keep their house.
Link to article

FAQ – Can I buy with someone who is not my partner?

Yes. In a relationship or not. You can buy with someone else.

That said – if there is a home loan involved, borrowers may need to prove eligibility to the lender. A key test is that lender understands that all borrowers stand to benefit from the home loan.

There are also regulatory hurdles for some – an overseas buyer may need FIRB approvals.

But in principle, yes – you can buy property with a non-romantic partner – like a friend, sibling or parents.

Key home loan considerations

I have listed the advantages to buying property with other people. Like improving affordability and buying sooner.

In my mortgage broker experience I consider exploring the home loan structure as a crucial part of any home loan discussion.

Home loan structure is something that a mortgage broker can advice on. Home loan choices for buying property with other people need to consider a balance between what borrowers want, and what they are eligible for.

My review of a unique lending product for sharing property ownership provides some great insight around how a home loans could be structured.

Final word

Buyers often find themselves compromising when it comes to buying a property. I explored examples in this article where the compromise was not area or price related, it was to share home ownership.

Buying property with other people is not for everyone. Buying combinations where owners are not in a spousal relationship make up a clear minority of all the home loans I have structured as a mortgage broker.

That said, for some borrowers who bought with someone else it was a pivotal step towards owning a home for themselves – 100%.

Engage with a mortgage broker early. See what your options are.

Note for readers: Some facts and figures altered for to retain anonymity of my clients.
Always seek financial, tax and legal advice specific to your situation.