Co-owning property is a great way for first-time buyers to get into the property market if they are financially unable to do so on their own. While it is an attractive opportunity, you need to carefully consider the contract and its pros and cons before signing the final agreement.

Disadvantages:

1. Each member in the investment group is responsible to make monthly payments towards the home loan. If one person defaults, it affects everyone.
2. One person’s bad credit score will have a negative effect on the rest of the group members and a higher interest rate will be charged
3. A Will should be drawn up for each investment member to make provision for when a member pass away and what happens to that person’s portion of the investment.
4. Without a legally binding agreement, you could have no legal recourse if you and your partners disagree or fall out. Don’t assume that you will always agree or have the same investment objectives – even if they are your flesh and blood or a very close friend. Everyone one’s lives change, perhaps through marriage or the tough times that come with losing a job or emigration, a partner may even die – all scenarios that could put your investment at risk.
5. These changes may require that partner to be removed from the bond, which would mean a new bond will have to be applied for and another credit assessment processed.
6. If one party incurs other (unsecured) debts, a lender could look to the joint asset to recover those debts, therefore impacting on the other party’s personal situation.

Advantages:

1. Expenses can be shared between co-owners for example the maintenance of the property, levies, rates and taxes.
2. You can enter the property market much earlier in your life and start building a property portfolio.
3. There is a higher likelihood of bond application approval if both individuals have a good credit record.
4. There is no need to save up for a full deposit. So, if a home loan provider requires a deposit of 20 per cent, you only need to save up for half of this – assuming you are sharing the investment with one other friend or family member.
5. Your home loan can be paid off much faster if the group of co-owners agree to pay more money per month towards the bond.

“It’s clear that there are various pros and cons when it comes to jointly buying a property with friends or family, but it doesn’t mean that it can’t work’, says Sandy Walsh, MD Property.CoZa SA. “The best solution is to consult with one of our qualified Property Practitioners and discuss the options of such an investment thoroughly”.

Obtaining professional advice and drawing up a legal contract, with the help of an attorney, will ensure that all co-owners are protected and that the rules and responsibilities of all the partners are clearly stipulated.