DON'T DO IT ALONE! CO OWN A HOME.

WITH the dream of owning our own home dwindling, one solution is co-ownership.

“Co-ownership is increasingly popular with de facto couples, friends and family looking to help each other meet stricter property lending criteria” and cope with the higher property prices, says Mortgage Choice senior corporate affairs manager Kristy Sheppard.

What is co ownership? It?s when two or more people get together and share the ownership of a property.

In a first homebuyer survey compiled by Mortgage Choice last year, 72 per cent of respondents planning to purchase before 2012 said they would not be buying alone.

“Co-ownership makes property ownership more affordable,” Ms Sheppard says.

“It is a strategy that enables potential buyers to pool their money for a deposit and utilise their borrowing power to get a loan. Co-owners can split the cost of the property and all the associated expenses, so that repayments are noticeably less than what you?d pay if you were buying solo.”

Jamie Olsen considered buying a house on his own. But less than a month ago, he decided to go down the co-ownership path with his best friend.

On his own, Mr Olsen says, he would not have been able to spend as much for a property or afford the $1 million pad in Sydney?s trendy suburb of Potts Point that he is now contemplating with his friend.

To take the emotion out of the business agreement, he says, they have also put in place a co-ownership arrangement spelling out “the rules of engagement” should circumstances change.

Jeremy Levitt, a director of PodProperty, which arranges co-ownership agreements, says economic uncertainty has made co-ownership more attractive “as parties can effectively share their mortgage risk”.

PodProperty estimates the number of people it has assisted with their co-ownership plans grew 51 per cent year on year to January 1, a jump Mr Levitt largely attributes to the effects of the global financial crisis and people wanting to spread their mortgage risk.

People aged 25-30 see co-ownership as a way of getting into the market years before they could if they were purchasing alone, he says.

Those looking at co-ownership need to organise three things, Mr Levitt says: group finance, conveyancing and a co-ownership agreement.

But he emphasises the first stop should be a co-ownership agreement.

Such an agreement sets out the things people need to do before exchanging contracts and “ensures everyone knows what their rights and obligations will be once they have purchased the property; [it] is signed prior to purchasing the property”.

The main benefit of co-ownership is it cuts the costs – such as stamp duty and monthly expenses – of buying a house for an individual. It also allows buyers to borrow more and therefore afford bigger and better houses, and it gives people greater capacity to meet their loan repayments.

But there is a flipside to co-ownership. If a person in the group can?t afford to meet a repayment or defaults, the remaining members are responsible for making those repayments.

Another risk is your partner may want to pull out of the agreement before you do, which could force you to sell your share of the property.

Ms Sheppard cautions people to treat co-ownership as a business partnership. “They need to meet regularly to discuss the situation, to see how each party is going with repayments, to see if there are any changes they need to make,” she says.

Steps towards property co-ownership:

1.Arrange a co-ownership agreement.

2.Speak to a mortgage broker about group loans and finance requirements.

3.Find property, negotiate price and obtain a contract of sale.

4.Find conveyancer and send them your contract of sale for review.

5.Obtain building and pest inspection report.

6.If you are happy with the property, sign and exchange contracts.

It goes without saying that The Novak Agency has a huge list of brilliant properties for sale. Call 1300 4 NOVAK (8978 6888)- 24/7 – we never sleep.