Combining funds with your family or friends can provide you with multiple options when it comes to buying a home. If this is something you are considering, it will require good planning. There is a lot at stake; money, yes, but also relationships and family ties.

Here is a list of very important questions to ask, decisions to be made, agreements to solidify and steps to take, before entering into a home purchase with a friend or family member. This will safeguard everyone involved, making you all feel secure and confident no matter what the future holds.

Why are you moving in together?

Maybe parents are getting older and want to downsize, maybe one of your children needs after school care, or maybe someone in the mix just needs extra family support. It is important to set clear understanding between all parties involved; especially when it comes to the type of ownership you're entering into. Co-owning a home can be in the form of joint tenants or tenants in common. Joint tenancy means both people have interest in the property and if something is to happen to one of them then the home will go to the other owner. With tenants in common, each tenant owns a portion of the property which will become part of their estate should something happen to them. 

Hire a Lawyer

In a case like this it is always advisable to use a lawyer when families are pooling their money together.  The cost will be a bit higher because there are more aspects to cover. You will be required to disclose your financial standing. All co-owners will need to share their credit report with all involved and this will be beneficial for the lawyer meeting as well. If you and a family member are attempting to secure a mortgage, then it is important to know where each person’s financial situations stands and how that could impact everyone involved. Disclosing how much you have available to put forward for a down payment, and how much you can afford as a monthly payment will be required.  There are calculators you can use to add up everyone’s contribution to figure out how much your family can afford. 

Imagine the Future

Your home is usually going to be considered a long-term commitment, life changes do occur and there are several things that could impact your housing arrangement and hopes for the future. It's important to have certain discussions before signing any documents. For example, what circumstances could arise where the property needs to be sold? For instance; what if someone gets married or gets a new job and needs to change location?  What happens if one person wants to rent the place out and the other wants to sell? Whenever entering into situations such as this it's important to ask as many “what if’s” as you can think of. It's always best to secure a flexible mortgage when more than one person is entering into a mortgage with another person. 

CME knows what questions to ask, and how to assess your current situation so that we can reduce the cost of borrowing as much as possible. Please pick up the phone and give us a call when you want to start creating a game plan and strategy that will help you reach your dreams.