Buyers Struggle To Meet Lending Criteria

While property pricing and market conditions favour buyers, many are still struggling to meet the lending criteria of financial institutions.  In light of this, many buyers are choosing to partner with a friend or family member to purchase property together.

This was the opinion of Adrian Goslett, CEO of RE/MAX of Southern Africa in a recent press release.  In today's property market, co-ownership has become an especially attractive option as the shared costs make it a much more affordable venture.  Although some banks no longer offer joint cheque or savings accounts, Goslett said that due to the vast number of buyers who are choosing to co-own with another party, many lenders do offer joint home loan accounts or mortgage packages that cater specifically for this situation.

He said there are definitely advantages of buying property with a partner, such as the greater prospect of finance being approved as well as the possibility of obtaining a bond for a higher amount.  Additionally, there is the benefit of a reduced individual financial commitment as all costs during and after the purchase process are shared.

"Both parties can contribute to the deposit, transaction costs, bond repayments, as well as the maintenance and utilities bills," said Goslett.  "It is important, however, that co-ownership is handled in the correct manner and that all aspects are discussed before any transaction has been concluded.  It is advisable that there is an agreement in writing that is signed by both parties, should any dispute arise in the future."

Goslett noted that some of the points that should be discussed and agreed upon between the parties are aspects such as:

-  What each one wants from the venture,
-  How long they plan to live together,
-  What happens if one wants to sell their share of the property in the future

The future plans of both parties will have a major impact on the partnership and how viable it is.  Each of the respective parties will have to be in agreement with regard to their expectations as well as their individual responsibilities.  Along with the shared cost, also comes shared responsibility.  To protect both co-owners, each partner should keep a record of all documents and payments made that relate to the property they jointly own.

If one person defaults on any of the payments, all partners will be held liable.  It is for this reason that choosing the right person to buy property with is so important and should be considered carefully.