Are You Finding Trouble Buying Your First Home? Home Co-Ownership Just Might be the Solution For You!

If you are a first time home buyer looking to share the financial burden of buying a home with a friend, roommate, co-worker or family member, then home co-ownership might just be the answer for you.

What is Home Co-Ownership?

Home co-ownership is a way of splitting the ownership percentage of a desired property based on the needs and financial resources of the parties involved. Meaning, two co-owners may split the ownership percentage of a property 50-50, or 70-30 for example, in each case, each co-owner is responsible for covering the downpayment, mortgage costs, maintenance fees, and closing costs associated with his/her percentage of the property. It is also worthy to note that a three way split between three parties can also take place if you wish to share your home with more than one co-owner.

Usually, in order to best reflect each co-owners percentage share of the property, co-owners divide the property into exclusive use areas, which may be entirely separate suites, or just separate bedrooms with the balance of the house being shared.

Since it is the co-owners who decide on how they want to divide the property to best reflect each’s share of the home, it is advised that co-owners have a really good understanding with one another in order to avoid any disputes regarding how the split is done. Furthermore, it is also advised that co-owners hire a lawyer to draft a formal agreement for them just in case any disputes arise in the future.

How Home Co-Ownership Works

Let’s assume that two family members want to buy a house worth $500,000, and split the ownership between them 60-40.

In this case, the family member who is entitled to 60% ownership of the house owes $300,000. Whereas his relative, who is entitled to 40% ownership of the house, owes $200,000.

Although the relatives are purchasing the same property, each relative could potentially pick different mortgage terms, different rates and different amortizations that are more applicable to them to pay off their debt.

Get More For Less

How can co-ownership help you get an even better home? If for example you are a young couple looking to enter the housing market in Downtown Toronto, instead of settling for a Toronto 500-600 square foot one-bedroom condo, you could look more towards a 800-900 square foot two-bedroom for $800,000.

In summary,  if it's to get a bigger home or just to be able to stop paying rent, home co-ownership provides first time home buyers with a chance to enter the housing market in a way which is more affordable than purchasing a property all by yourself.

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Toronto Real Estate: Buy - Rent - Invest