Are you considering purchasing a property? Perhaps you are just curious about the processes involved in securing a home loan and purchasing a property. In Australia,there are many rules and regulations that can have a dramatic effect on the way you approach homeownership.
Much can be said about finding the cheapest home loans, the benefits of fixed rate vs variable and the myriad of options home buyers have in regards to home loans. What doesn’t get discussed much arethe TYPES of property ownership in Australia. Joint ownership is an increasingly popular option in today’s crowded and expensivemarket. Buying into a property with several people is an appealing option but there are some potential issues and pitfalls that you must be aware of.
What kind of owner are you?
For a prospective homeowner there are three types of ownership:sole proprietor, joint tenants,and tenants in common. A sole proprietor is the simplest form of home ownership;a single person owns the propertythey are responsible for any costs or liabilities that arise from owning that property. A sole proprietor also solelyreceives any income derived from the property.
If two or more parties are purchasing a property together,they can become joint tenantsor tenants in common. These two types of ownership differ in one key area, the legal ownership of the property in the eventof thedeath of one of the involved parties.
Tenants in common can sell their share of the property or bequeath it in their will. The Joint tenants have a right of survivorship, meaning a will is not needed to pass ownership of the property from a deceased tenant to the surviving tenant.
What type is best?
The right type of ownership for you depends on several factors. A joint tenancy suits a married couple, as they will feel safe in the knowledge that the house is shared between them but will not be lostin complicated legal proceedings if the unthinkable happens. A joint tenancy is enabled by a joint home loan. This type of ownership isusuallysplit 50/50
A common tenancy allows for multiple parties to own varying share ofa property. For example, Bec could own a 50 percent stake in a property, with Ben and Jerry each owning a 25 percent stake. Shares can be sold and bought at any time. A common tenancy offers flexibility but will revert to your estate if you pass away.
A sign of the times
Common tenancies are becoming more and more common as property prices rise. Owning a share of a house with a group of like-minded individuals is very appealing, but you must take carebefore signing the dotted line. Entering into a commontenancy can be a savvy investment move, buying into a property nowand selling your share when the property rises in value.
Joint tenancies feel a little old fashioned nowadays, but the peace of mind afforded to couples still resonates. A joint tenancy can be broken, relieving some of seriousness associated with it.
House prices in Australia don’t seem to be slowing, pricing many individuals out of the dream of home ownership. A common tenancy is a way of entering the property market without being saddled with a crippling mortgage. Interest rates are at historic lows, making right now the perfect opportunity to find the cheapest home loan, some like-minded associates, and enjoy the benefits of common tenancy
Purchasing a property is a huge step, regardless of which type of ownership you chose, make sure you do your research,and only make the leap when you can afford too