CommBank Property Share Review [2024] | An Insider’s Take

Property prices out of reach?

Want to buy with your partner but keep finances separate?

Want to but an investment property with someone else?

One solution can be to combine your borrowing power with a friend, partner, or family member. In fact, NAB research reported 40% of young Australians would entertain buying with a non-romantic partner.

You can share ownership, running costs and enjoy a property that suits you both more compared to if you went it alone.

Oh – and stop renting.

But what about the home loan? Do you really have to share that too?

Buying with other people usually means being co-borrower with them also. This means all home loan repayment obligations are shared.

It doesn’t necessarily need to be this way.

“….share the home but not the loan”

Property Share can offer a solution. Two parties (typically a combo of couples and/or individuals) can share home ownership but borrow separately.

This is what Property Shares does differently to many other home loans – two parties can share the home but not the loan.

A mortgage broker can help set up a property share structure if it suits your circumstances.

What is Property Share?

Property Share is a unique home loan structure – specifically designed for shared home ownership.

Homeowners can be tenants in common or joint tenants – legal advice can determine what the ideal ownership structure is for buyers.

Property Share structures for home loans can cover many ownership combinations – mates, family, new relationships. It can even accommodate some company and trust borrowers.

I have heard the questions – Isn’t this the same as split home loan?

This is entirely different to a split home loan.

If you are a co-borrower on a home loan, your share the responsibility of the loan account and all the repayments that go with it. If your mate cannot meet their repayment this month – then you still need do. Lenders use the term ‘joint and several’ when referring to the loan responsibilities of multiple co-borrowers.

The key feature of Property Share is it allows the borrowers to be solely responsible for their own loan repayments – they are the only borrower.

How is it possible? A cross-guarantee.

Instead of loans being shared, borrowers can guarantee one another’s loan.

“I guarantee your loan. You guarantee mine.”

This reciprocal arrangement is referred to as a cross-guarantee.

Loans are in the name of one owner but still require a commitment from the co-owner. This is offered by way of a guarantee to the lender using the shared home as security – security guarantee.

This would enable the lender, in the case of a loan default by a borrower, to sell the property and use the proceeds to pay down the loan.

A guarantor is not responsible for the monthly loan repayment responsibilities – that is for the borrower. A guarantor could become ultimately responsible though. They are providing the backstop (security guarantee) in case the borrower defaults on their loan agreement.

Which bank offers Property Share?

Property Share is the term CommBank uses to structure a loan for borrowers who only want to borrow their share of debt.

In my mortgage broking experience, I can recall many discussions with lenders who gave the impression they offer a structure like Property Share, but in turned out they are referring to a joint home loan that is split—different.

Over my time involved in mortgage broking, CommBank has had a clear, well-established lending policy for home loan applications involving Property Share.

Top benefits of Property Share

Below are some key benefits of a Property Share home loan option over other alternatives.

Split the costs of owning a property

Home ownership comes with costs – it’s part of the deal. Purchase costs and ongoing costs can add up. There can be upfront stamp duty, followed by maintenance, rates and usually the biggest ongoing cost of all—your home loan.

Rather than borrow to the max, many Property Share borrowers can find buying with someone else gets them a better place – and they could borrow less. Sharing in any costs can mean more leftover cash each month, something savvy borrowers can use to pay off home loans well ahead of schedule.

Buy sooner or bigger or both

Combining deposits can mean you can buy sooner, or bigger—or both.

When LVR is calculated for a Property Share loan, combined deposits are used. So, by joining forces with someone else, you could be in a position where you already have enough deposit to buy a house.

Add your borrowing power to that of your potential co-owner, you could find yourself buying a more expensive property than you thought possible. Now seems a good time to show you how to access some good property value research tools.

A bigger and more expensive home sounds exciting but make sure it still aligns with your goals and objectives. That said, it does introduce some intriguing buying options for people.

Choose your own home loan

A unique feature of a Property Share structure is each borrower can choose their own home loan product with features to suit their circumstances.

Be it an offset feature, or fixed home loan product, each borrower can choose something to suit themselves.

Having your own home loan can allow you to track how much you have paid off your share – no need for complex calculations – like who paid what and when.

Investment property

Property Share also offers a solution for people wanting to buy an investment property together.

Loans can reflect ownership percentages as well as contributions to a purchase. Interest costs can be a major tax-deductible expense for an investor. In my experience working with accountants, clarity is very much valued – separate loans could help here.

Advice from a qualified tax accountants is important – I recommend it form personal and professional experience.

Maximise future borrowing capacity

In my experience, as a mortgage broker, I saw the future benefits play out successfully for borrowers who took used the Property Share structure.

When you apply for a loan – credit card or another home loan – you normally disclose any ongoing loans and commitments you already have. Many lenders can now check your active loans via your credit file.

If you have a joint loan, rather than in your name only, it can be an area of weakness in any subsequent loan applications. This is because many lenders attribute all the debt to you – even though you have borrowed with someone else and split your loan.

Remember the term regarding shared loan liability being “joint and several”?

Property Share clearly represents the loans you need to meet your ongoing repayments for – no explanation needed.

I introduce borrowers to brokers who can figure out the most suitable lending structure for your circumstances.

Features that set Property Share apart

In my experience as a mortgage broker, I have seen many lenders try to articulate just how different their home loan products are from the competition. When it is all boiled down, while there can be small, nuanced differences, they can all be quite similar.

In my experience, Property Share from Commbank has features other lenders cannot or will not offer. While some lenders may have the capacity to provide a similar structure, I have not seen a policy articulated as clearly and well-defined as CommBank.

Separate loans – Separate borrowers

• One property
• Two parties
• Two applications

Each person (or ownership group – could be a couple) needs to qualify for their own home loan. That is why there are two applications. Property share can separate out two groups at a maximum.

In the case of an individual buying with a couple, the individual (one application) could have their own loan and the couple (second application) could share a joint loan.

Under Property Share, once both loans are approved, their combined loan limits can be used towards the house purchase.

No other property needs to be involved. Each owner offers the same property as the security guarantee – borrowers cross-guarantee each other.

Choose your own home loan

Different people can have different goals. Separate loans allow borrowers to choose products, rates, packages to suit their circumstances. They might have offset accounts or choose a split home loan.

Property Share allows a home loan choice that suits a borrower with minimal compromise from the other owner.

One borrower might prefer a fixed rate home loan whereas the other might want a variable home loan with an offset account. Property Share can accommodate both.

Repayment strategies

Having a repayment strategy for a home loan is often the result of analysing the bigger picture – your goals and objectives.

Some borrowers might want to make minimal repayments, leaving spare cash for holidays, investing or a safety net.

Others use multiple repayment strategies to pay off their home loan as quickly as possible.

Surprisingly, paying off a mortgage fast does not suit everyone. This is an area in which to seek professional tax and financial advice.

Property Share means each borrower can proceed with a repayment strategy that suits their bigger financial picture.

Loan amounts can be different

Property Share loan amounts do not have to be equal. The loan amounts for each borrower can be a fair representation of many things, mainly:

• Ownership percentage
• Contribution amounts

If two buyers contributed unequal deposit amounts, they can nominate different home loans for their “share” of the home loan.

The same goes for buying with a friend where you might have an unequal ownership split. One reason for this might come down to what was affordable based on each persons borrowing capacity.

See a mortgage broker first to get a good idea of borrowing amounts.

LVR and Property Share

Loan to value ratio for Property Share structures is based on the combined contribution.

The contribution amounts between parties can often be very different. When calculating LVR for a Property Share loan, the lender considers the combined contribution of all borrowers.

Take our example from above. Lenders mortgage insurance could be avoided with a bigger deposit. Let’s rework the figures with May contributing more.

Phil’s loan would still be $330,000 but May’s could reduce to $230,000.

Provided this combination works for both owners, Property Share enables Phil and May them to:

• Avoid LMI using combined savings.
• Have different loan amounts accounting for their different contributions to the purchase.

Everyone situation is different. Property Share needs to be in the best interests of all borrowers.

LMI and Property Share

A feature I like with Property share is that it is still something that can be done with low deposit.

The Property Share structure can accommodate loans that require loan to value ratios over 80% LVR. There are other benchmarks to meet to access high LVR loans and ultimately, approval of lenders mortgage insurance (LMI) – like repayment type and property type.

Who is Property Share suited too?

There are certain borrower combinations and loan purposes more suited to Property Share than others. I list a few of them I have seen in my experience as a mortgage broker.

Common buyer combinations

Buy with a friend
Keeping finances apart can go a long way towards keeping friends together.

Buying with friend is an ideal owner combination to consider Property Share.

As well as using each other as leverage into the property market, separate loans can provide a clear record of lending and individual property equity.

Separate lending also provides room for further borrowing for each owner in the future as they are not over-exposed to the loan repayments of another party.

Siblings team up
Buying with a sibling is something I have seen work well. Like buying with a friend, Property Share offers an opportunity to buy something you might not have afforded by yourself.

Siblings may want to borrow further in the future, perhaps with a partner. Property Share offers a clear record of loans and responsibility so that the impact any existing lending has on future plans is minimised.

New relationships
Living together is one thing.
Buying a house together is another.
Then borrowing together could be considered the step after that.

If you are in a new relationship, a major event like buying a house and all the finance-related implications it brings, can be fun – and fast moving, especially when a joint loan is part of the deal.

Property Share can provide borrowers with comfort knowing that they are borrowing based on their capacity to repay, providing borrowers a degree of independence.

For those in a new (or old) relationship, Property Share can allow for:

• Uneven contributions
• Different loan amounts and preferences
• Different repayment strategies
• Keeping finances separate

The intention of Property Share is not to replace the need for any relationship-based financial agreements. But it does offer transparency around each borrowers lending and equity position.

It also offers a degree of financial independence if that is something of value.

Refinance into Property Share

Refinancing into a Property Share structure is a handy option for those who might wish to unwind a previous joint loan scenario that is proving to be cumbersome.

Refinancing a Property Share loan is something CommBank can consider for existing CBA customers, as well as new customers who want to restructure an existing home loan.

In my mortgage broking experience, I have seen borrowers run into difficulty when existing joint home loans hamper their borrowing efforts. An existing joint home loan could be the reason an application for a new home loan is not approved. Refinancing, as opposed to selling, can be an option to explore.

It is worth noting that in recent years some lenders a better trying to understand repayment commitments for joint lending. It can require the co-operation of co-borrowers but something a mortgage broker can provide guidance on.

First time buyers

First time buyers can explore if Property Share suits their circumstances. One on hand, it can be a great solution to affordability and deposit shortfalls. However, buyers need to consider how it may affect their access to First Home Owner Grant incentives. In Australia, grants for first time buyers usually require all owners to be eligible for the grant.

First home buyers should explore their eligibility to a raft of incentives to assist them into property ownership and decide their best way forward. The home loan structure is just one of a number of aspects a mortgage broker can help you navigate as part of the home loan approval process.

Purpose

Property Share can be used to buy a home to live in (owner-occupied purpose) or an investment property (investment purpose).

Owner occupied purpose seem straightforward on paper, but given many Property Share owners live in the same house, there are many aspects of home ownership to be worked through.

Property investment on the other hand, is mainly paper-based. An ideal structure on paper could be reflected in a very clear Property Share loan structure. Property Share can accurately reflect owners ongoing repayment obligations and equity position. It can also provide clear accounts and reporting for recording purposes.

Construction and vacant land is something, to my knowledge, Property Share cannot do. Construction requires specific loan features that a mortgage broker can take you through.

Property Share Alternatives

Split home loan

Typically, the default loan structure is for joint owners to also be joint borrowers – even if loans are split. Loans might be nicknamed “mine” and “yours,” but look at who the borrowers are on the loan contract and home loan statement. That should tell you who the co-borrowers on the loan are.

As an alternative to Property Share, the above – a split home loan – is the most obvious.

A split home loan can still use the one property as security. It is readily available at many (not all) lenders. Split home loans can leverage the borrowers combined deposits and incomes to achieve the required home loan limit. Rather than borrower separately, they are co-borrowers.

A key difference split home loans offer compared to Property Share, is the joint borrowing arrangement can see some financial weaknesses within an application supported by stronger borrowers to achieve the desired borrowing limit.

Already have equity?

Another alternative to Property Share could be available to homeowners with existing equity. Provided the equity is enough, a buyer could borrower for their portion of a new purchase using property they already own. If the other co-owner also does this, then they have both arranged separate loans to by a jointly owned property.

Given it might require a significant amount of equity it is not an option for everyone. However, it does offer a couple of significant advantages over Property Share:

• There is no need to guarantee the other borrowers loan as neither borrower is relying on the jointly owned property for their loan.
• The owners can buy a property without having to mortgage it. This leaves the option open to draw on this property as security for any future lending needs.

I have seen this borrowing strategy work well and recommend getting tax and legal advice in relation to this arrangement.

Case study: Property Share for a family investment

Over my time in mortgage broking I have helped clients directly in setting up a Property Share structure.

One Property Share example I can share is when a family – two parents and two (adult) children wanted to invest together.

Below I show how my experience with Property Share achieved upfront results for buyers and allowed them to continue to borrow to invest after the purchase had settled.

My lending experience with Property Share

A few years ago, I had a family come to me wanting to make a joint property investment purchase in Sydney.

Client brief
Parents and kids wanted to use combined funds to buy investment property.
Kids already had existing lending together as did parents.
Preference to have own loans as per existing groups – kids and parents.

Proposal
Buy $540,000 investment property between four people.
50% owned by parents and 50% owned by kids.

Contribution
$130,000 combined
Covered 20% deposit plus purchase price plus costs

LVR
80% LVR overall preferred to avoid lenders mortgage insurance.

Home loans I arranged
Property Share used to separate lending into two borrower groups that suited family.

Loan 1 – Parents loan
$201,000 (guaranteed by kids)
New to bank – chose a low fee option

Loan 2 – Kids loan
$231,000 (guaranteed by parents)
Already a bank customer so loan sat within existing package

I was dealing with two parties. One was the parents and the other being the two kids. The kids were clearly a team having invested together previously. The contribution to the purchase of $130,000 was made up of the kids’ savings of $50,000 and parents contribution of $80,000.

Pooling savings meant the overall loan to value ratio (LVR) was 80% LVR – so avoided LMI.

The parents contributed more to the purchase which was reflected in them having a loan that was $30,000 less than the kids.

Property Share allows two parties to separate their lending. So, it was kids on one side with 50% ownership and parents on the other.

Each party chose a different product to suit their circumstances.

Benefits of Property Share for these borrowers

• Allowed for investment property purchase.
• Savings combined which allowed this purchase at 80% LVR.
• Shared exposure to an investment opportunity.
• Limited loan repayment exposure to overall lending.
• Loans for each party fairly reflected initial contributions.
• Different loan products chosen to meet different needs of each borrower group.
• Lending was separated into two clear groups – Kids and parents.
• Both borrower groups were able to continue to borrow after this purchase as the loans required we taken out in their names only – not in all four names.

Considerations

For home loan products, it can pay to know what impacts loan eligibility. Sometimes decisions made today can affect borrowing in years to come. Property Share is no exception. Weighing up benefits against other considerations is something a mortgage broker can help you do.

Borrower eligibility

As much as the loan product might sound appealing, it also needs to stack up for the lender.

Not everyone will be eligible.

Each borrower group needs to be able to borrow on their own without relying on the strengths of a co-owner’s capacity to repay. In my mortgage broking experience, there have been many occasions when Property Share could not be considered, even though it appealed to borrowers.

Residency
Some classes of temporary visa are not able to be considered in isolation, which would make Property Share difficult. However, sometimes these borrowers could be eligible for a home loan as part of a joint application with say, an Australian citizen.

Financial position
Borrowing power is largely a function of income, expenses and what is left over. Both parties need to be able to borrow their home loan share based on their own financial position. Stronger applicants cannot cover any shortfall in weaker applications.

This differs to many joint home loan applications that can be assessed based on a combined financial position of applicants. This can enable applicants with stronger financial positions to cover for other weaknesses within a combined application.

Fees and charges

Property Share can potentially introduce more fees and charges as it separates loans and borrowers.

Fees and charges vary across lenders and home loan products. If the same borrowers share multiple loans, any fees they might incur could be covered under an existing agreement.

Interest rates

Generally, the higher the loan limit the better the interest rate. So, borrowers who keep all loans at one lender can potentially benefit from lower interest rates. Lenders usually require at least one borrower to be consistent across any home loans when calculating interest rate discounts based on an overall lending limit.

Property Share purposefully separates borrowers, so they might end up with a lower combined loan limit for interest rate discount purposes.

Loan limits are not the only factor weighing into interest rate discounts – a discount could be could be LVR-related.

That said, the benefits of a Property Share structure, like getting a bigger house, need to outweigh what you could miss out on. Consider rates, fees and charges.

A good mortgage broker can explain the pros and cons and put them next to an alternative.

Security guarantee

The guarantee required under each Property Share home loan is key to this unique home loan structure. This differs to a family guarantee that can cover a deposit shortfall and and avoid LMI.

A guarantee can be considered one-step removed from being a co-borrower. Still, the risk remains that if there are loans against a property you own, a lender has access to the property if they need to take action to repay debts owed to them.

The security guarantee required for a Property Share loan can come with guarantee and legal advice fees. While these could be nominal compared to outcomes of not seeking legal advice, they are fees all the same.

As with many home loan related considerations – you need to weigh up the pros and cons as part of your research.

Final word on Property Share

As with most agreements in life – it is good to get it right from the start.

Property Share has both short term and long-term benefits for borrowers. Signing up for a loan that is yours and yours only to repay makes sense.

Property Share opens up further borrowing options down the track by ring-fencing, to a limited extent, your exposure to any ongoing loans repayment obligations.

If you already have a joint loan, a refinance home loan could see the structure reworked into Property Share.

Speak to a licensed broker to see what lending options you have.