Cairns Mortgage Broker – Preston Finance – Home Loans Cairns

Buying A House With A Family Member

Buying A House With A Family Member

Buying your own home or investment property in Cairns these days can seem like a daunting prospect. If you’re just starting out, and your finances look like they’ll never stretch to the required deposit or mortgage, it can seem as if buying a house is an impossibility.

Over recent years more people are investigating the option of getting a home loan for a property with another family member, either with a sibling or a parent/ parents.

There are undoubted benefits in doing this:

  • You can buy your home sooner, it doesn’t take as long to save part of a deposit
  • You may be able to buy a better home or in a more desirable area
  • Financial commitments are reduced and more manageable as you’ll be sharing the deposit, loan, and repayments

Joint loans are typically structured to accommodate couples whose finances are aligned. But the good news is that there are now more finance options for people not in a typical husband/wife relationship, with loans being set up to accommodate all parties.

Preston Finance & Insurance will work with you to find the right solution and interest rate for your situation.  Call our Cairns based office for an obligation free consultation on 07 40520750.

How will a home loan work when I’m buying with family?

There are two main ways that a bank will finance a home loan:

1. A joint home loan

2. A property share home loan

Benefits of a joint loan compared to buying separately

  1. Increased buying power
  2. More manageable mortgage repayments
  3. Better purchasing options in terms of area and house

Disadvantages

1. Each partner is held liable for the full loan amount - if for some reason one party can’t repay their share, the other is fully liable for both shares.

2. Things can become difficult if one party wants to sell the property but the other wants to keep it.  Whilst you are able to sell your share of the property at any time, you can still be on the hook for the full loan until it has been paid out. 

Benefits of a property share loan

  1. Smaller loan for each partner - borrowing capacity is not so significantly reduced for the future.
  2. Each party can pay the loan at their own pace, so if one partner is in a financial position to pay the loan quicker, they can do so and benefit.

Disadvantages

  1. Limited availability in the market, few banks offer this option
  2. There has to be a loan application for each party which need to be approved at the same time. If one party has a poor credit history, this will be a problem for everybody.

It is advisable to only borrow the amount that you are comfortable paying back, avoid the big temptation to take on the maximum approved sum for a mortgage.

If you need advice about buying property with your family members, getting the best rate for your mortgage or any other finance business, contact us at Preston Finance & Insurance today on 07 40520750 to arrange an obligation free appointment.

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Preston Finance & Insurance is part of the Preston Law Group and is a locally based business in Cairns.

 

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