New home buyers tossing up mortgage sharing with strangers

Leigh Chamberlain (left) and Lance Bishop (right) are two friends who mortgage-shared to build their dream home (above). Photo / Supplied.

Owning a home on your own is slowly becoming a thing of the past, with new home buyers teaming up with siblings, friends or even strangers to get a foot on the property ladder.

Tauranga Rentals owner Dan Lusby said it was becoming more common especially for first home buyers to combine their resources or financial equity with their siblings or their parents and in some cases with friends to buy a house.

Friends Leigh Chamberlain and Lance Bishop teamed up early last year to buy a piece of land to build a house on together off the Papamoa coast.

Chamberlain said he had hoped to do it alone, but interest rates were too high and with a joint mortgage - it was going to be a lot more doable.

The pair have been friends for over 10 years and moved into the newly-built house with some flatmates, Chamberlain's partner, and newborn baby just before Christmas.

Both easy-going people, Chamberlain said the investment has caused no conflict between the two.

"We aren't going to let a piece of land or a house tear apart of friendship."

Lusby said, "there is a lot more of this happening. Some of these might have been strangers 15 years ago but today they are joint homeowners."

In many places like the UK and Canada, people are literally 'real estate speed dating' to see if as two strangers, they are compatible to take on a mortgage together.

Rapson Loans and Finance mortgage broker Tristan Hewett said people were exploring a lot of different ways to achieve their goal of homeownership.

Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys, said it is not uncommon for siblings to team up or for families to help younger family members to purchase their first home.

Danielle Weston, a 22-year-old legal secretary credits the purchase of her first home in Tauranga to help from her parents.

Weston was a 19-year-old at the time and did not have the credit history to prove she could pay off the mortgage.

She saved religiously for over a year and then went halves with her parents in the deposit, she said.

"It's so difficult out there now, I absolutely couldn't have done it without them."

Weston ended up selling the house and investing her half of the profit.

She will need the 'honey pot of money' to help her onto the tough property ladder in the future, she said.

Hewett said there had also been instances where vendors had agreed to leave some money in the house and entered into a vendor-finance arrangement or rent-to-buy arrangement with the buyer to allow them to pay off this money off over time.

Lusby said joint-buying also largely comes down to wages in the city, which was not as high as other major cities.

"If our wages are lower, then it definitely puts much more of a strain on people's ability to pay rent and other bills, let alone save to buy a house," he said.

Danielle Weston worked closely with her parents throughout her first house ownership. Photo / Supplied.

The average rent in Tauranga for a three-bedroom house was now $480 a week.

"There are a lot of people who are only paid $20 an hour, that's $800 gross a week, and after paying taxes they would only have $650 a week to spend, so saving to pay for the deposit would be very difficult," he said

Lusby said depending on people's situation, potential buyers might need to lower their expectations and look further afield than the highly popular Mount Maunganui and central Tauranga to other suburbs such as Otumoetai and Bellevue.

He had heard the odd person recently say they would still "keep hoping" but probably the only way of affording to buy a home in Tauranga was if the housing market "crashed", freeing up more affordable homes, he said.

OneRoof editor Owen Vaughan said: "The key thing to remember when buying a property with another person – whatever your relationship – is to agree at the outset how you will split the proceeds when you decide to sell. It can be especially tricky when one person wants to sell and the other doesn't and or if each person is contributing different amounts to the purchase."

"You can avoid any potential problems by keeping the transaction on a business-like footing."