Life doesn’t always go as planned. Imagine two close friends who've found themselves becoming single mums around the same time, with school age kids and limited resources. Both women would love to raise their kids in a home they own, but neither of them has come through their relationship break ups with enough for a deposit on a new property, nor could they afford to service a home loan on their own. Maybe co-ownership of a house that they can all live in is the answer?
More stability could mean more security later
They weigh up the pros and cons. Their kids are already close. The two women have known each other for years and are confident they could live in the same house without straining their friendship. They can pool resources for the deposit and home loan repayments. And the benefits of sharing the running of a household just makes so much sense.
Both women know it’s not forever. They decide to Co-own for the next few years and see how they go, with the aim to build up as much equity as they can. This home will be their stepping stone, with the goal being to purchase their own individual properties later on.
They know they’ll need to have candid conversations about money, so they find a financial advisor to help them make a plan. They also make a plan for things like how they'll split the proceeds of a future sale, taking into consideration factors such as one of them has a lower income and is therefore unable to contribute as much towards the home loan repayments, but has more saved to contribute to the deposit. The property sharing agreement they draft together with each of their lawyers should record these types of decisions.
The two women apply for conditional approval with a Kiwibank Home Loan specialist. Once they have conditional approval sorted, they find a property that's going to work for them and make an offer. It’s accepted and within a few months both women and their kids are living as two families in one happy household.
Working with change as it happens
A number of years down the track, something pretty major happens. One of the women has found a lovely partner who wants her and her kids to move in with them. She and her co-owner have a couple of options for what to do with their home, which they had set out in their property sharing agreement. One owner could stay on, with the other continuing to contribute to the mortgage for the time being, until she and her new partner decide what their shared goals are. Or they could sell up and move on to the next stage of property ownership.
Either way, Co-own has enabled them to enter the property market, and hopefully started them on the path of financial independence.