Do you and your spouse earn a good income, but don’t quite make enough to qualify for the home you want? You may want to consider co-owning a home with another party. In order to do this, both parties will need to fill out a mortgage application and include their incomes.
Co-ownership of a home is an option for people who want to buy a property but cannot afford to do so on their own. There are many benefits to this type of ownership, including the ability to get a lower interest rate on your mortgage. However, there are also some drawbacks that you should be aware of before you decide to co-own a home.
Is Co-Ownership the Answer For an Affordable Mortgage?
One of the first things you’ll need to consider is what type of ownership arrangement you want. The main options are joint tenancy and tenancy in common. Each has its own benefits and drawbacks, so it’s important to choose the one that’s right for you.
Each owner has an undivided interest in the property and all owners have equal rights to possess the entire property. This type of ownership is often used by married couples or family members.
Tenancy in Common
A form of co-ownership where each party owns a separate interest in the property that may not be equal. For example, two owners could have shares of three quarters and one quarter instead of half and half. Unless specified, it is assumed that the shares are equal.
Benefits of Co-Ownership
- One of the biggest benefits of co-ownership is that it could allow you to get a lower interest rate on your mortgage. This is because lenders view co-ownership as a lower risk investment than a single-family home. As such, you will likely be able to get a better rate on your mortgage if you decide to co-own a property.
- It can help you to build equity in a property more quickly. This is because you will be responsible for paying down the mortgage principal each month, rather than just the interest. Over time, this can help you to build up a significant amount of equity in your property.
Drawback of Co-Ownership
- Difficult to find someone who you are compatible with as a co-owner. You will need to be sure that you can trust the other person and that you are both on the same page with regard to the property. Otherwise, it could lead to conflict down the road.
- One person may want to sell their share of the property while the other does not. This can create a lot of tension between co-owners and may even lead to legal disputes. If you are considering co-ownership in Surrey, it is important that you have a plan in place for what will happen if one person wants to sell their share of the property.
Overall, there are both benefits and drawbacks to co-ownership of a home. It is important that you weigh the pros and cons carefully before making a decision about whether or not it is right for you. If you do decide to go ahead with co-ownership, be sure to choose someone who you can trust and who you are compatible with as a co-owner. This will help to ensure that your experience is a positive one.
Thinking of co-homing? Talk to us.
Co-ownership can provide opportunities for increased affordability, access to more space, and shared resources – but it can also lead to tension and conflict if not handled properly. At Ingram Mortgage Group, we specialize in helping buyers find their perfect home—and that includes those who are looking for co-ownership arrangements.
Give us a call today to discuss your needs and see how we can help!