Data from the Australian Bureau of Statistics shows in the past 12 months property prices across all states have increased, pushing the average loan sizes up to $416,300 in NSW, $367,900 in Victoria, $305,400 in Queensland and $277,800 in South Australia.
This latest data indicates that the situation for first home buyers is not getting better anytime soon, in spite of the Reserve Bank’s rate cutting campaign.
In which case it’s no surprise that first home buyers are turning to friends and family to help lighten the load of buying and maintaining a home.
An exclusive report released by St George Bank quizzed 1000 first-time buyers and found 66 per cent had purchased property with their partner, family or a friend, while the rest went it alone.
By pooling their finances together, first home buyers are recognising that they can split the high cost associated with buying property and make owning a home a more realistic option.
It is however, important to remember that this option needs to be treated like a business arrangement and requires a lot of trust and good planning.
If entering into this arrangement, do a joint venture with a trusted friend. Make sure the joint venture agreement is drafted by a solicitor and is clear cut. Be aware that you will be jointly liable for the loan repayments. Remember this is a business transaction and any paperwork relating to the property or mortgage should be in the names of the co-buyers.
Parents should be very careful about offering to go guarantor – better to simply gift some equity than have responsibility for the entire loan.
It also recommended that all or both parties in the arrangement keep duplicate copies of all paperwork associated with the purchase.
