Imagine two best friends who’ve flatted together for two years. They’re in the early stages of their careers, earning good salaries and enjoying life. The one thing they don’t love though. Renting. They’ve had to move flats three times in two years and are frustrated at the lack of control they have over where they live.
Both of them are good savers and have been squirrelling away money and contributing to their KiwiSaver accounts. But neither of them feel close to saving enough for a house deposit by themselves. For the two flatmates, both happily single and focused on their own career goals, property ownership has been filed in the too-hard basket.
Time to get on the ladder
One night when they’re bonding over trash reality TV and their shared annoyance at the retro wallpaper in their flat, they joke that they should team up and buy a place together.
Deciding whether it’s a thought worth taking seriously, they jump online and read up about Co-own. They crunch some numbers and realise that they actually could afford a modest place together. Home ownership, here they come.
First they set out some ground rules. They decide it makes sense to stretch to three bedrooms, so they can get a flatmate in to help pay their mortgage. They also want things to be fair for both of them in the long term. They are hopeful that this will set them up for the future and eventually, they'll want to move on. They go through different scenarios and things they'll need to cover off. For example, they have different amounts to put in for a deposit, so they work out a fair way to reflect that if they sell the property in a few years.
Getting on the property ladder
Once they have conditional approval for a home loan and have a property sharing agreement underway, the fun starts. Weekends become an exciting adventure, visiting open homes and seeing what the possibilities could be. They manage to narrow down the options and eventually make an offer on a solid three bedroom bungalow in a part of town they like.
After bringing in another flatmate to help with the bills, they’ve noticed their mortgage repayments aren't too different to the rent they were paying, and it's towards their home loan, not a landlord’s. Now they’re more than best mates and flatties — they’re co-owners with their feet on the property ladder.
This scenario is based on a hypothetical situation to demonstrate how Co-own could work in this example. It doesn't detail all the risks and considerations that you’d all need to be aware of when entering a Co-own arrangement. Visit our Co-own page for more information.
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Co-own: Maximum four people per application. Offset home loan may not be available. Excludes business banking.
This page provides general information and isn't intended as regulated financial advice. If you'd like us to review your specific situation, please contact one of our home loan specialists.