For many of us, homeownership feels increasingly out of reach.

With increasing property prices and the rising cost of living, saving for a deposit and securing a mortgage solo is a daunting challenge.

As a result, more people are considering alternative ways to enter the property market. One of these is buying a home with a friend, sibling, or even a business partner.

This approach could be a great idea, but could also be a nightmare waiting to happen. Here’s what you need to consider before jumping in.

Why Buying with Someone Else Makes Sense

1. Greater Borrowing Power

When you buy a property with another person, your combined income increases your borrowing capacity. This means you may be able to afford a better home or buy in a more desirable location than you could on your own.

2. Shared Costs

From the deposit to mortgage repayments, insurance, maintenance, and unexpected expenses, splitting costs can make homeownership much more manageable.

3. Getting on the Property Ladder Sooner

Instead of waiting years to save for a deposit on your own, pooling resources with someone else can help you enter the market sooner and start building equity faster.

4. Investment Potential

If you and your co-owner decide to buy an investment property, you could benefit from rental income and capital growth. Over time, this could put you in a better financial position to buy more property down the track.

What Could Go Wrong?

1. Different Financial Situations

Your co-buyer may lose their job, struggle with repayments, or want to sell before you’re ready. If one party can’t keep up with their share of the mortgage, the other may be left covering the shortfall.

2. Disagreements on Property Use

Will you both live in the home, or is it purely an investment? What happens if one person wants to move out? Differences in lifestyle and future plans can cause tension if not discussed upfront.

3. Legal and Financial Risks

If your co-owner defaults on their portion of the mortgage, the lender could hold you responsible for the entire repayment. This could affect your credit score and financial stability.

4. Complications When Selling

What if one person wants to sell and the other doesn’t? Without a clear exit strategy, disputes can arise, potentially leading to legal battles or forced sales.

5. Life Changes

Over time, life circumstances can change, for example, marriage, starting a family, the influence of a new partner on decision making. These situations could impact either persons desire to keep, sell, live in or move out of a home.

How to Protect Yourself

• Have a Legal Agreement – A co-ownership agreement should outline each party’s financial obligations, exit strategies, and what happens if one person wants to sell.
• Consider a ‘Tenants in Common’ Structure – This allows each owner to hold a specific share of the property, which can be useful if one person contributes more than the other.
• Discuss Long-Term Plans – Make sure you and your co-buyer are aligned on your goals, timelines, and expectations for the property, and consider the “what ifs” that can occur when life happens.
• Speak to a Lawyer, financial adviser and mortgage broker – Getting professional advice before signing anything can save you from costly mistakes down the track.

Final Thoughts

Buying a home with someone who isn’t your spouse or partner can be a smart way to enter the property market, but it’s crucial to go in with your eyes wide open. A clear legal agreement, aligned goals, and an open line of communication are key to making it work. If done right, co-ownership can be a stepping stone toward long-term financial security—just make sure you’re prepared for the challenges along the way.