Ditch the Double-Digit Deposit With Co-Ownership

Tue April 30th 2019

You can't or won't rely on the bank of mum and dad, but saving that 20% deposit seems like an impossible task, so where do you go from here? Co-ownership is an emerging trend in New Zealand's property market which is seeing would be home owners come together and secure a foot on the property ladder for a little as 5% deposit.

With home ownership at a 60 year low across New Zealand, there is no getting away from the fact that our housing market is failing so many.

Rental costs are on par with mortgage repayments across many areas of New Zealand, with so many would-be first time buyers reporting that it is not the ability to maintain monthly repayments, but the demand for high deposits preventing them from getting on the property ladder. But what if you could achieve home ownership with as little as a 5% deposit?

In the last 18 months, there has been an emerging trend in the property market thanks to co-ownership, with big players such as BNZ endorsing the scheme. There are a number of established and breakthrough companies also getting onboard, Miuwi in particular being dubbed ''the Tinder of property investing'' as a result of their savvy technique of using algorithms to match you with others in the same financial situation. Co-ownership can also be achieved through personal relationships, such as buying a house with friends or family members.

Buying your first home is a life-changing experience, but like many things, is won or lost in the preparation. Co-ownership is not yet widely recognised as a means of home ownership in New Zealand, and as a result some people have their doubts over it's credibility. Here, we take a look at the pro's and con's of co-ownership and what areas to give careful consideration.

What is co-ownership, and who is it aimed at?

Aimed at first-time buyers, co-ownership is the process in which you buy a property with the help of another party. You own a share of the property, usually around 75% but as a result you only need a smaller deposit - typically 5%. Over time, you have the option to buy a bigger share of the property, meaning eventually you could own 100% of your home.

Banks are partnering with organisations to offer this exciting opportunity to our first-time buyer market, however each bank will have their own criteria, much like they do if you were applying for a 'regular' home-loan. Factors such as income, residency status, and property type will be assessed by the bank - normally co-ownership is only available on new-build properties.

What are the benefits of co-ownership?

What are the drawbacks of co-ownership?

What else should I consider?

How can Cave Financial help you?

As a mortgage broker, we can negotiate rates and terms with lenders. We understand the conditions and clauses in mortgage offers and will be able to talk you through these and ensure they're fair and manageable. We can also guide you through the relevant insurances you will need as a homeowner, such as Income Protection, and Home & Contents Insurance. Furthermore, as an established company ourselves, we have built up great relationships with conveyancers and will point you in the right direction to trusted specialist lawyers.

Contact or email us today to a free consultation on how co-ownership could work for you.

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