Split home loans unlocking doors for Aussie buyers

By Newsdesk

December 06 2023
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Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties together.

Split home loans unlocking doors for Aussie buyers

This innovative approach to property investment is creating new opportunities for potential buyers who are eager to share both the cost and the joys of a new home.

Julian Finch, the visionary behind Finch Financial Services, has noted a significant uptick in enquiries about purchasing property collaboratively. "Thanks to some clever thinking on the part of financial institutions, they have developed a suite of products to help people get into the property market by sharing the cost of the property and being able to split the loan liabilities and repayments across all the owners," Finch explained.

These split home loans offer customisable options to manage finances independently while reaping the collective benefits. Finch highlighted that such products can be "easier to manage than you realise and you can still maintain your own separate finances."

However, Finch also stresses the need for due diligence when deciding to invest with others. "If you’re thinking about investing in a property with other people while keeping your finances separate, this is a great option, but there are some serious considerations and risks that are involved."

For those considering this venture, Finch lays out the landscape: "When purchasing a property with someone else there are some things to consider." From eligibility criteria to the various types of loans available, he underscores the importance of a clear understanding of the financial commitment.

Regarding qualifying for a split home loan, Finch clarifies, "all borrowers must be owners of the property, meaning that third party guarantors are not allowed." Moreover, he advises all parties to "seek independent legal advice before entering a property share agreement" to ensure they are "fully informed when you sign the statutory declaration."

The benefits of a split home loan are enticing, with Finch stating, "The main benefit of a split home loan is the flexibility to structure your loan to suit your financial needs." This customisation can be especially beneficial, allowing each party to navigate their individual financial journey while collectively investing in a property.

Nonetheless, Finch is upfront about the potential pitfalls: "On the other hand, there are risks involved when you split your loan with someone else." The responsibility of guaranteeing the loan can lead to significant repercussions if the other party defaults, including a potential impact on personal relationships and credit reports.

Finch advises those interested in this arrangement to also ponder over unexpected situations. "In such unplanned circumstances, you will need to have a strategy to face issues," he says, referring to topics like illness, unemployment, or decisions on property management.

To navigate these complex waters, Finch emphasises the value of experienced advice. "When deciding to enter into a split home loan agreement, it’s important to have a home loan specialist to guide and advise you."

This rise in split home loans is a reflection of the contemporary Australian approach to property investment - resourceful, collaborative, and progressive.

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