Co-owning a house with a friend – possible in Australia?

Foggy: Co-owning a house with a friend – possible in Australia?
Hi,

I’m stuck paying board at the moment and want to move closer to where I work/study. A work friend of mine happens to want to do the same, but she wants to buy a house. We are both young (19/21), and the thought of co-owning a house, and renting out the free rooms crossed my head.

I have $ 25,000 in the bank, she will have that by year’s end. The issue is, she works full-time saving $ 500 a week, I just quit my job to study full-time and I receive $ 350 a fortnight in Government benefits, plus a part-time job, approx $ 100 a fortnight.

Aiming for a 4/5 bedroom house in the $ 400,000 range, is it possible for me and my friend to jointly buy the house by going 50/50 in the deposit? By renting out the free rooms to carefully selected uni students, I would *probably* be able to get by contributing $ 150 approx myself toward the $ 500 a week repayments, because of the other boarders that would be sharing the house.

What are the risks involved here? For one, I’m guessing the bank won’t give me any loan because I’m a student. For two, if I or her stop paying off the house, are we both 100% liable for each others debts regarding the house? Is it possible to jointly own a house and only be liable for half the loan?

I’m thinking it’s better to just leave my 25k in the bank and let her buy the house, it just means waiting for her to come up with the extra cash. I suppose I just want to put my money to good use, but not massive risk.

Opinions? Has anyone been there done that?

Cheers 🙂

Answers and Views:

Answer by scat
You will not be able to get a loan – at the minimum you will need to have a salary of around 65K to get a loan of 185K (you will need to pay other costs associated with the loan that will eat up some of your deposit).

Also, the rent you get from your housemates will be taxed – as its considered income.

If you default on the loan – the bank can claim your share of the house and then force your friend to sell so that bank can get their money.

There are two ways to write up the share agreement – you can agree to own the home together and if one of you dies the other inherits the house (your share) or you could own the shares in the house sep. which means if you die, the half share will go to whomever you leave it in your will or you can sell your share at any time (so your friend could find herself sharing with a stranger with almost no say in the matter).