Consider these 4 things before you co-buy a home
As
home-buying goals continue to be top of mind for many Canadians, more people
are looking into other avenues to break into the market, including co-buying a
home or condo with friends, family, a significant other or an investment
partner. Communal homeowners, or co-buyers as they’re known, are a growing
trend and can be an economical way to become a homeowner. While there are some
big benefits in buying with someone else, it’s important to enter the
partnership with mutual agreement on both sides to ensure things go smoothly.
An honest conversation on finances and the future as well as consulting a
professional for legal advice is necessary.
1. Start with a talk.
Before
you go online to look at houses or call a realtor, discuss the goals and the
unexpected with your co-buyer by answering these questions.
What are
you both trying to get out of this?
What if
one person wants to sell before the other?
What if
one of you loses your job and can’t make mortgage payments?
Will you
both be living in the property the entire time you own it?
Will you
rent? Who decides on the tenant?
If
you’re not significant others how will a relationship, marriage or kids change
your homeownership situation?
Although
no one can predict every life event, it’s important to remember when buying
together that your co-buyers’ ups and downs may impact you. If you can’t answer
any or most of these questions, you may want to hold off until you have a
clearer picture of what joint ownership will look like for you.
2. Swap credit scores.
The
terms of your mortgage will most likely be calculated based on both co-buyers’
credit ratings. Your credit report is a very important indicator of your
financial health; it contains a full history of how you’ve paid your bills, how
much outstanding credit you have, and how responsible you are with managing
loans. Before you purchase, swap credit scores with your co-buyer, which will
give you a clear indication if you should enter into a joint investment. If
your co-buyer makes late payments or has less-than-stellar credit, it’ll affect
your credit standing too, which will in turn have negative consequences on your
future investments and loan applications. Remember this is not a violation of
your co-buyer’s privacy. Credit scores offer no indication of someone’s
financial situation, that is to say how much money they have, but instead give
you information on how they’ve handled loans in the past, both small and large,
which is vital to your decision to buy with them.
3. Put your plan in writing.
A
neutral third party, like a lawyer or other mediator, can assist you in putting
your plans in writing, including how long both parties will have to commit to
owning before they can sell and what happens if someone changes their mind or
needs to sell earlier. In addition to the situational information, a lawyer can
also help you keep track of the percentages each part owns in the event of an
uneven split. This ensures the party who contributed more is protected and
won’t lose out in the event of a quick sell or another unexpected situation.
It’s also important to address how you will deal with the cost of repairs,
maintenance or other monthly costs. If the split of your home is 60/40 will you
also be splitting the inevitable costs of things like your washing machine
repair the same way? If not, how will that factor in when you sell? Reach an
agreement that makes both parties comfortable and put it in writing so there’s
no confusion.
4. Check in often.
Twice a
year, particularly if you don’t actively see your co-buyer, sit down to discuss
any concerns you may have about your shared investment. This should be in
addition to frequent communications. Perhaps property values have skyrocketed
and you’d like to consider selling sooner than you thought, or your co-buyer
wants to move out and rent their share of the home. Yearly maintenance to keep
the place running smoothly should be discussed as well, and any other upcoming
events that will require both buyers’ attention.
(Toronto Star:
https://www.thestar.com/sponsored_sections/adultlikeapro/2018/09/28/co-buy.html)
I need PRO contractorSubmit your info.
Like：2443
ThekeystolightingyourhomeWhenweplanourhomes,wethinkaboutmanydifferentfeatures,fromflooringandhardwar...
2019timetoactonhousingsupplyandmortgagesTheunderlyingissuesaffectingthesupplyofhousingintheGTA—and,...
YoumightthinkYorkUareaisboringsuburbs.WefoundapastoralwonderlandYouwon’tfindtheseneighbourhoodsonto...
Thecondofamily:RaisingkidsinthecityThesingle-familyhomeisnolongerthegoldstandardforfamilyhousing.Asm...
Please fill in correct info,！
