Have you have ever thought about buying a house, but not sure if you could do it on your own? Did you know you could become a home owner by purchasing a home with a partner? Royal Canadian Realty can help you find a home you can purchase with your partner or partners, who can be friends or family. Here is some friendly advice and some explanation of co-ownership.
Types of Co-Ownership
You can co-own a home in a variety of ways. If you go in to buying a home with a partner, you will need to know a bit about the most common options.
Joint Tenants: Each co-owner, or tenant, has an interest in the home. If a tenant passes away, that tenant’s share goes to the other tenant. The tenants’ interests are undivided, and for the whole property, not separate portions.
Tenants in Common: Each tenant is the owner of a part of the property. This becomes part of the tenant’s estate upon passing. Usually, each owner has a portion of the building or land, and is the most popular type of shared home ownership.
Tenancy by the Entirety: This type of ownership is only for married couples who own the property together. These are distinct shares, but not equal. Joint tenancy requirements apply, but the couple must be married at the time they get the property and stay married for the tenancy to be valid. If they divorce after being Tenants by the Entirety, the couple becomes Tenants in Common.
Some Advice To Keep Things Smooth
All owners need to sign the mortgage, which can only have one lender. Each owner is held liable for the mortgage. The percentage that each owner has should be clearly stated and recorded. This should also include any livability differences and square footage or services. There needs to be some sort of contract that states what will happen if one owner wants to sell or rent out their part of the property.
Although it may make sense that more people will bring more income and make approval easier, partners bring their own debts too. Credit scores are blended, so if someone has a low score, it can affect the type of financing available. It may be better to leave that person out of the property title. Remember though, some lenders don’t make a big deal about how the property is split, while others want to see everyone on the application have an equal share. Life events may change the living situation as well, so having a flexible mortgage is important. These are commonly called variable-rate mortgages, usually having smaller penalties than fixed-rate if the mortgage needs to be broken.
Some points to remember
Have a contract
Share credit scores
Share responsibilities and record agreement.
Know what to do if one partner needs to leave
Have a repair fund.
If you have any questions, please let the agents at Royal Canadian Realty help find the answers. Owning a home with a partner is just as fulfilling as owning a home on your own. Each way of home ownership comes with challenges and delights. Let us help you become a home owner today.
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