Co-Buying a Home When You're not a Couple

Consumers are getting more and more creative in finding ways to own a home. A growing number of young, single people who are "just friends" are buying property together as an economical way into the market.

Communal Homeowners ("co-hos") - as they are known in some circles, such as TIME Magazine - are a growing trend in Canada and elsewhere.

Listening to CBC Radio One's lunchtime phone-in show the other day, I heard a young woman caller share that she is closing on her first home that she bought with a female friend. "My share of the mortgage payments is much lower than I was paying in rent," she said. She got a mortgage rate of 3.9%. The two friends bought the home jointly as both a home (dividing up the space) and an investment.

There are definitely some big benefits to buying a home with a friend/colleague, and a few pitfalls you'll have to watch out for:

PRO: You could end up having a much nicer property than if you were to go it alone.
PRO: You may well pay less in monthly mortgage payments than you were paying in rent!
CON: What happens if you want to sell and your friend doesn't? If you were to die?
CON: You could end up co-owning (and likely co-habitating) with someone you thought you liked!

As a young adult, you might not think to have tough financial and future-oriented conversations with your pal, but you really need to if you're going to purchase a home together. You should...
  • Line up pre-approval for a mortgage
  • Have a partnership agreement drawn up by a lawyer
  • Buy disability insurance
  • Have candid conversations with both sets of parents, i.e. "What would happen if one survived the other?"
  • Draw up written wills that spell out how their estates would be handled

It's worth noting that in other cases, a parent and child will jointly buy a property together, too. Or a grandparent might be moving into the 'granny flat' downstairs to augment the cost of home ownership.

Do you know someone who is buying a home in an "unconventional" arrangement? Leave your comments here.

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