How to buy your first home with a sibling or friend
Saving a deposit for your first home can be tough, which is why some Australians team up with a sibling or friend to buy a home together. It’s an arrangement that can make ownership more achievable, especially when combined with the First Home Guarantee.
The First Home Guarantee allows eligible buyers to purchase their first home with a 5% deposit without paying lenders mortgage insurance (LMI). The scheme can be used by two people jointly – and they don’t have to be a couple.
You can apply with a partner, sibling or friend, as long as both applicants meet the eligibility criteria. To qualify, you must:
- Be Australian citizens or permanent residents aged 18 or older.
- Be first-home buyers (or not have owned property in Australia in the past 10 years).
- Intend to live in the property as owner-occupiers.
- Apply for an eligible loan with principal-and-interest repayments through a participating lender.
That means you can’t use the scheme to buy an investment property. You’ll need to move in once the purchase is complete and live there as your main residence. The rules don’t prohibit renting out a spare room, provided you still occupy the property yourself.
Why co-buying can make sense
Pooling your resources with someone else can help you:
- Enter the market sooner by sharing the deposit and borrowing costs.
- Access better locations or larger properties than you could afford alone.
- Share ongoing expenses such as council rates and maintenance.
However, it’s essential to plan carefully. You’ll both be on the loan, which means sharing full responsibility for repayments. It is a good idea to come to a formal agreement setting out each person’s share, responsibilities and what happens if one wants to sell or move to help prevent future problems.
Buying together – and using the First Home Guarantee – could open doors that once felt out of reach.
Licensing statement: Rayne Finance ABN [70 605 100 838] is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192. Disclaimer: (1) As with any financial scenario there are risks involved. This information provides an overview or summary only and it should not be considered a comprehensive analysis. You should, before acting in reliance upon this information, seek independent professional lending or taxation advice as appropriate and specific to your objectives, financial circumstances or needs. This publication is provided on the terms and understanding that: (2) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication. (3) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to the maximum extent permitted by the law to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.
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