Considerations Before Agreeing to the Joint Purchase of a House?

Joint ownership of property, joint home ownership, home purchasing club

There are six important aspects to consider when you are planning to buy a house along with someone else. If you think carefully about your plan, and assess its viability by answering the following questions, you are much less likely to make a decision you will regret in the future.

1. Share your picture of what your new house will be like with your partner in the purchase

This is crucial to ensure that you are both looking for similar things, or that compromises can be comfortably made, without either party being dissatisfied with the situation. Make a list of each of your requirements and compare them carefully, particularly with regard to the kind of rooms, the neighbourhood and the design of the building. You should also clearly understand what your friend will insist upon, and what he or she will not be willing to compromise about.

2. What kind of home are you planning to purchase? Will you be sharing a unit, or have one each?

This is a relevant point, since it makes a lot of difference when you are actually sharing living and working spaces with your friend. Privacy is very important to some people, and you if you are one of these people, you should go in for separate units, even if you are purchasing property together.

3. What kind of decision-making process are you likely to go through before you can decide on a particular property?

If one of you is the kind of individual who takes a long time to make a decision, while the other prefers to make quick decisions, problems could arise. The former kind of person would like to see several properties, while the latter will rapidly make a choice from the first few houses seen. So if you and your friend arrive at decisions at different paces and based on different reasons, you will need to be very understanding with each other if you want to co-operate during the house-hunting process, which can be quite frustrating in any case.

4. Have you engaged the services of a mortgage lender or a realtor?
If this is the case, it is a good idea to have a conference where all parties concerned, including the vendor, the realtor and the lender so that everyone is clear about what is entailed.

5. What is your status as far as a mortgage is considered? Has the mortgage been pre-approved? What are the terms and purchase cost of the mortgage?

This data will be available in the good faith estimate. Your friend and you should see how much your pooled approval amount is, to determine how much you can afford to spend on the joint purchase of your property. You will also be able to calculate how much you both will have to pay each month. In most cases, you will both, as joint borrowers, have to qualify for a single mortgage, whether the property agreement is a tenancy in common or a joint tenancy. This should be done before you begin looking for a home.

6. What is your job scenario?

Another important aspect to consider is your job, as well as that of the person you are planning to buy the house with. This information is necessary, because you have to be sure that monies due every month can be paid on time, taking both your job stability, career prospects and actual salary into account. You should know that you both can afford to make the payments, given your present job scenario.