Co-Ownership Of Property – Get A Property Share Loan

You don’t have to think of owning a property as a solo adventure. With home prices rising across Australia, a lot of Aussies are now turning to co-ownership, which lets them pool their cash with family, friends, and financing partners to invest in property.

And the great thing about co-ownership is that it’s not limited to a single niche of buyers. From first-home buyers to investors, co-ownership can be beneficial for everyone.

But it is important to understand how it works, the different structure available, and the potential pros and cons before you make a commitment.

What is Co-Ownership?

Co-Ownership is when two or more parties legally share the property they own.

And unlike renting or informal agreements, co-ownership is recognised on the property title, and each owner’s rights are clearly defined in legal agreements.

A few co-ownership arrangements include:

• Couples or families buying a home together.

• Friends or siblings pooling funds to purchase a property.

• Investors teaming up to purchase and rent out a property.

• Buyers co-owning with a financier, such as through Islamic home financing.

Example Of A Co-Ownership Investment Loan

Jeff and Betty, a couple, rent with Jeff’s brother Tim. They decide to buy an investment property together but want to manage their finances and mortgages separately.

They find a property worth $600,000. To meet the minimum deposit, Jeff, Betty, and Tim each contribute $24,000, covering the 5% genuine savings requirement plus costs such as stamp duty, title transfer, conveyancing, and Lenders Mortgage Insurance (LMI).

The bank assesses all three equally for serviceability on a 95% investment loan. If approved, Jeff and Betty (as one unit) and Tim each borrow $276,000 ($600,000 – $48,000 deposit ÷ 2).

The mortgage split doesn’t have to be equal. For example, Jeff and Betty may contribute $31,680 (two-thirds of the deposit), giving them a larger ownership share. This means they’d receive a greater portion of rental income and sale proceeds.

All terms are negotiable. Each party should obtain independent financial advice and have a solicitor draft a co-borrower agreement covering ownership share, ongoing costs, and rights.

How Does Co-Ownership Work?

Co-Ownership’s structure determines your rights, responsibilities, and what happens if you exit it. There are three types of ownership structure:

Joint Tenancy

• All owners hold equal shares.

• If one owner passes away, their share automatically transfers to the surviving co-owners.

• Common among couples and families.

• Requires unanimous agreement to sell.

Tenancy in Common

• Owners can hold unequal shares (e.g., 70/30 split).

• Each party can sell or pass on their share independently.

• More flexible, popular among friends and investors.

• Often the default form of co-ownership in Australia.

Co-Ownership via a Financiar

• Instead of borrowing from a bank, you co-own the property with a financier.

• Your share grows over time as you buy out the financier’s portion.

• Common in Islamic home financing, as it avoids interest.

• Offers unique protections, such as limited liability in the case of foreclosure.

Co-Owning An Investment Property

Co-Ownership isn’t limited for homebuyers, you can also co-own investment property. For instance, you can team up with an investor and purchase a duplex.

For this, you could:

• Own equal or different percentages of property

• Share rental income in proportion to ownership

• Diving expenses like rates, loan repayments, and maintenance

This strategy allows investors to access properties that are higher value, spread risks, and enter the market sooner with lower upfront capital.

Benefits of Co-Ownership

Affordability

With co-ownership, you can share the deposit, loan repayments, and property costs as well.

Faster entry

You no longer have to save up for a huge deposit, you can split it with your co-owner and

Bigger Opportunities

You can buy in desirable suburbs or choose to invest in higher-value properties.

Shared Risks

Ongoing costs like repairs, vacancies, or rate rises are divided. So, you won’t have to worry about taking on all the risk yourself.

Risks Associated with Co-Ownership

Financial strain

If one party can’t meet repayments, the burden falls on the others. This can also lead to disputes.

Potential For Conflict

There can be disagreements about property use, selling, or even maintenance.

Exit complications

Selling your share or buying out another’s can be tricky.

Loan implications

All owners are equally liable for the debt, regardless of ownership split. So, it is essential to team up with people you trust.

How To Protect Yourself In A Co-Ownership Arrangement?

The key to making co-ownership work is clear agreements upfront.

Get a co-ownership agreement to outline responsibilities, financial contributions, exit strategies, and even dispute resolution.

Structure your loan properly. Decide whether to borrow together on one loan or separately for each share.

Also plan succession and have contingents in place when one of the owner passes away. Finally, you should be taking professional advice from a certified property lawyer and draft watertight agreements.

Is Co-Ownership Right for You?

Co-ownership can be a powerful way to enter the property market sooner, share risks, and access alternative financing. This method, however, requires trust, clear agreements, and a willingness to compromise.

It may suit you if:

• You’re struggling to save a deposit on your own.
• You want to invest in property but prefer to spread risks.
• You’re comfortable sharing financial and legal responsibilities.
• You’re seeking an ethical or interest-free financing option.

Final Words

Co-ownership isn’t a one-size-fits-all solution. For some, it’s the fastest path to homeownership; for others, it’s a smart investment strategy. The key is structuring it properly, with the right ownership model, financing arrangement, and legal agreements in place.

Do your homework and seek professional advice to unlock the benefits of co-ownership while minimising the risks.

Also, It’s essential you get independent legal advice in order to avoid many common traps that come with a co-ownership arrangement.

Call us on 1300 889 743 or complete our free assessment form so one of our mortgage brokers can properly assess your needs and tell you whether a co-ownership investment loan is right for you and what you’re looking to achieve.