From a lending perspective, banks see co-ownership loans the same as any other standard investment loan. There isn’t a higher risk involved with this type of loan: the only difference is in how the loan is set up.
What that means for you and your co-borrower is that you won’t have to meet exceptionally difficult requirements in order to get approved. To qualify, you’ll generally need:
- A sufficient deposit: For the home loan as a whole, you’ll need to have a deposit of at least 5% of the property value as genuine savings between you and your co-borrower. Some lenders will accept a no deposit option such as a gifted deposit to make up the amount required but third party guarantors are not accepted. Find out more.
- To be purchasing an acceptable property: Most lenders have restrictions relating to the type of property that you want to buy as well as its location. As long as you’re buying a standard property or unit in or near a metro/city location, you should be fine.
- A stable job: You and your co-borrower need to have stable employment with at least 3 to 6 months history in your respective jobs.
- A good income and asset position: Your income and asset position must reflect your current age and the number of years you’ve been working as well as be sufficient enough to meet standard serviceability requirements set by the bank. “Serviceability” means you’re capability in meet your mortgage repayments for the amount you’re borrowing.
- A good credit history: Although it will help your case if your credit file is clear of black marks like defaults, judgments, bankruptcies and a high number of credit enquiries, there are exceptions if you can build a strong case with the right lender. A mortgage can help you do this.
- A like-minded co-borrower: This isn’t a lending requirement per se but a co-ownership investment loan only works if you’re able to go into mortgage with someone you trust, with the character and capacity to make their mortgage repayments and someone who shares your investment goals, such as, when you would like to sell the property.
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