Dynamic presenter and Financial Adviser Tahei Simpson provides whānau with the keys to unlock their future and encourages first steps onto the property market. Saturdays, 8.00pm (R), and On Demand.
Q: A good friend and I are both sick of renting, and have talked about getting a home mortgage together as co-investors. We both are looking to have the same amount to deposit each to keep it straightforward. What sort of contracts and paperwork do we need to look at in light of us not being married or family, especially if only one of us wants to sell down the track?
Tahei replies: Buying homes now may require creative solutions, and getting together with family or friends will become more common. Before you go shopping you should talk about what your expectations are and get legal advice. You might have been best friends since kindy but that won't necessarily prepare you to carry the can if your bff needs to pull out for whatever reason.
You'll need to make sure you have in your agreement and on the title that you are "tenants in common" which means your share goes to whoever is named in your will. If you're "joint tenants" it'll go to the other owner, which is what you might expect for a couple, or family members.
If you intend to live in the house with the other buyers, some banks will even assess you as a household, meaning you won't have to meet servicing requirements all on your own - even if you're not related. However you'll still be jointly and severely liable so if your friend can't pay the loan - you'll have to.
With your mortgage, you can consider splitting your mortgage into separate loans between you so you're each responsible for your own loan and paying it off according to your means.
There's all sorts of scenarios that might happen in the future that a good lawyer can help you work through - such as if one of you decides to move out, or buy another property and use your home as equity. The more groundwork you lay at the beginning, the easier it will be later on.