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Exploring the possibilities of co-ownership

Buying a property can be a challenge. Saving up for a deposit and then being able to afford the monthly payments can seem like a daunting task. At the same time many recognise the long-term financial benefits of owning a property. For many, the solution is to wait until they are in a long term, committed relationship before looking to buy their own home. This is, of course, co-ownership between two partners.

Co-ownership, however, does not have to take this form. In fact, any two people, or any group of people can get together to buy a property, making co-ownership a way for individuals to buy their first property much earlier in life and increasing the opportunities for building a diverse property portfolio.

There are several benefits to co-ownership. These include:

Lower costs

If you are buying a property together with friends or relatives your costs are obviously going to be lower. Your contribution towards the deposit, various other costs such as notarial fees, and the monthly loan repayments will be equivalent to the percentage of the property you will own. This means you can get on the property ladder much sooner.

More choice

By teaming up with a group of people to buy a property, you will have a bigger budget and therefore the option to invest in a bigger and better property than might otherwise be the case. A good example of how this can work is buying a holiday home for an entire extended family which can be shared and even rented out when not in use.

Flexibility

Co-ownership also offers greater flexibility as each individual has the right to sell their specific share of the property or borrow against it. This is particularly useful when friends or siblings invest in a property at a young age, providing collateral or the opportunity to consolidate ownership at a later stage when the individuals concerned begin to establish their own families.

The importance of planning and communication

Like any important financial decision, deciding to co-own a property needs careful consideration. It’s important that there is absolute clarity between all the parties involved on what everyone’s expectations and obligations are. Also keep in mind that while you might have a great relationship with your friends and relatives today, there is no guarantee that this will last for ever. Dealing with a property when two people in a relationship break up can be stressful enough, never mind if there are three or more individuals involved.

If you are thinking about co-ownership, it’s important to get the right advice. Firstly, make sure you have discussed the matter fully with all those who are interested in joining you to invest in a property. Before starting your property search, speak to a notary and to your bank so that you are clear on the legal implications and on the budget you have. At MeDirect, our home loans team is available to discuss your plans and offer advice on the best way forward.

MeDirect Bank (Malta) plc, company registration number C34125, is licensed by the Malta Financial Services Authority as a Credit Institution under the Banking Act 1994. Applications are subject to the Bank’s lending criteria. Terms and conditions apply and are available on request.

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