I have heard the question, ‘Should I buy property with my sibling?’ pretty often and it all depends on your relationship with your brother or sister as to whether you buy a property or not. Buying a property can make or break a relationship and the same applies when buying with friends too.
Many of us today will buy a property with our partner, so is buying a property with your siblings any different? It is important to note that unforseen events can happen and family dramas can occur, but you should ensure that you have all the necessary conversations first so you are both on the same wavelength.
If you can decide and agree on a property to buy then that is a good start, but if you are going round and round in circles and cannot even agree on the same property then it might be time to realise buying a property together might not be for you.
There are of course pros and cons to buying a property with your siblings, so to help you decide what is the best option for you, I have outlined the pros and cons below.
Pros of buying a property with your siblings
- Strong relationship - Buying a property with family can be a great opportunity to bring your relationship closer as you are both tied to something you want to ensure is a success.
- More affordable – Buying a property on your own can be quite expensive, but buying with someone like your brother or sister can make this property much more affordable, especially if it is your first property and you are trying to get onto the property ladder.
- Easier to get a home loan – If there are at least two of you signing the mortgage application, then it becomes far easier to be approved a home loan than if you were doing this alone. Both your combined incomes will be considered as well as the average of both credit scores.
- Shared monthly expenses – When you own a property with someone else, all your costs and expenses for loans, bills and maintenance are shared making holding a property much more affordable.
- Grow property portfolio – Buying a property with your siblings also means that you are able to grow your property portfolio much quicker and easier due to there being two of you. It allows you to buy a property sooner, thereby allowing you to purchase property two faster.
Cons of buying a property with your siblings
- Both liable – When it comes to mortgage repayments, then if both your names are on the mortgage then you are both responsible for repayments. If your sibling cannot pay their share of the debt for whatever reason, then the responsibility comes down to you which could affect your own financial situation.
- Unforseen events – All families might experience some kind of drama or falling out; however this is not the best thing to happen if you own a property together. You should therefore be clear from the start and know what each other wants from this property and each other’s goals. It is best to get a legal document drawn up which states all these issues upfront and clarifies all the issues such as what happens when the other party wants to sell.
- Can affect future borrowing – Owning a property can also affect your future borrowing on other loans and investments. If you want to borrow to buy another property, then it is important to remember that you are fully liable for your current share of the property and the bank will take this into account. This therefore restricts your borrowing capacity for future purchases.
- Difficult living situations – If you decide to live in the property together, rather than rent it out, you might find it difficult living with your sibling in close living quarters and disagreements can occur. In this situation you might find it easier to just rent the property out and remain joint owners.
- Sell up – Getting out of owning a house isn’t a fast or simple process. It can take several months at least to sell a property so you need to be sure that you are both in this for the long run and will get along even when things get tough.
Overall, buying a property with your sibling can be a success if you already get along and can fully trust one another. It can also provide a great way to get on the property ladder and make owning a property much more affordable than if you were to buy a property on your own.
However, it is also important to keep in mind that family is family and disagreements can occur which can affect your relationship with your sibling as well as the future of your property ownership. If you are considering buying a property with your siblings, and you both get along well, then make sure you keep in mind the following points:
6 things to consider
- Get a legal document drawn up
- Ensure you are both on the same wavelength and know what is at stake
- Remember you are both financially liable if the other party cannot pay their half
- Your borrowing capacity can be affected due to being liable for the full loan amount
- Try to keep this property purchase strictly business and don’t let family dramas get in the way.
- Disposal of the property – If you want to bequeath your property through your estate then you should choose Tenants in Common. This allows you to dispose the property to those in your will such as your children. Otherwise you should opt for joint tenancy which allows the surviving party to inherit your share. Joint tenancy is more popular for those who are married.
Published on 5th of February 2016 by Marty Stanowich