Couples & Friends overlook pitfalls of buying property together
The property boom has made it increasingly difficult for first timers to get into the market so many dating couples and friends are choosing to buy together but often overlook some of the pitfalls. Gavin Southwell, National Sales Director Gauteng for MortgageSA, says, "Because of the rapid escalation in property prices, we are seeing more and more couples and friends pooling their resources to get a bigger bond and get onto the property ladder. Going in jointly allows for investment in a better location which ultimately results in a better return.
"Most banks recognize joint income, it's just as easy to buy as a couple as it is to buy on your own - the banks require the same documentation, including separate bond applications for applicant, proof of income and bank statements."
"As a rule, 30% of joint gross income will be used to work out how big a bond can be taken. "But it's more than just a financial decision; there are other things couples and friends need to consider, especially in instances where the relationship breaks down"
With friends who go into partnership it is often best to buy a property that allows for a certain amount of privacy and equality, including separate bathrooms, garage and parking bay facilities. "Differences in facilities like an en-suite bathroom or one parking garage can aggravate a harmonious living arrangement as the financial commitment to the bond is the same, but one gets the better living quarters or better parking facilities," says Southwell.
A couple that splits up now owns a property together and each may want
their money out. The only way around this is for either one to buy the
other out or to sell the property and split the profits accordingly
- so it should be agreed upon before the purchase is made.
It is useful to set out house rules (in the case of friends) regarding
responsibilities of maintaining the property, house guests, pets and
other hot topics - without becoming too pedantic.
Without point scoring, keep a record of what each party spends on the
house - especially permanent fixtures and additions. "Review your
budgets and update contributions and insurance regularly".
Article by : Dave Welmans - (www.thepropertygame.co.za)