With today’s increasing prices on the housing market, a lot of first-time home buyers tend to find alternative ways of buying the property that they want. One such way is by purchasing with family or a friend. So instead of only you on the deed, you will have someone to help you with the financial burden of buying a property.
When you see more than one name on a property deed, you will immediately think that it’s a married couple. But, aside from married couples, a lot of people are buying properties together – like parents and their children, siblings, non-married couples and sometimes friends.
On the bright side, having someone to share the burden of a loan and everything that goes into having a house creates a prospect that is not possible for any single borrower. But, having to make a commitment to sharing a property and mortgage with someone else means that you will have to have an extended financial responsibility together. Here are some tips from Brampton Mortgage Broker Rakhi Madan.
Advantage of Joint Mortgages
Smaller down payment
The typical minimum down payment needed to be eligible for a mortgage is 5%. If you are eyeing on a property that is quite expensive then the down payment will also be expensive. Having someone to share in purchasing a certain property will greatly help you in making the down payment and will also significantly make mortgage payments easier.
Purchasing a property thru joint mortgage will help increase your buying power as your maximum mortgage amount will increase. If you have a partner in buying a property, you may have the option of choosing a larger and much better property and therefore a better lifestyle.
Cheaper maintenance
When you have somebody to share mortgage payments, this will also mean having somebody to share with the costs of maintaining the property you bought. The cost needed to fix problems like roof repairs, window renovations or hot water tank breakage will be split. It can be comforting to know that you will not have to shoulder property maintenance costs alone.
Disadvantages of Joint Mortgages
You must always remember that you may be best of a friend but the future is unpredictable. There may come a time that your friend will decide to go on his own, perhaps maybe he\she wants to set up a home with his/her partner. Or your friend loses his\her job.
It is vital to know what would happen with your joint mortgage once the other decides to go on his\her own way. You and your friend are responsible for the mortgage, so if one decides to leave then the one left will have to shoulder the entire mortgage.
It will be helpful to ask legal advice before deciding to under a joint mortgage and have a document created, like a trust deed which covers all possible situations that may happen.
Contact Rakhi Madan Mortgage Agent for more information.