Co-Buying Property Loans

A Strategic Path to Home Ownership

Australia’s Housing Affordability Challenge

The Australian property market has seen significant price increases in recent years, creating a tough environment for many aspiring homeowners. With house prices now averaging more than five times the typical household income, saving for a deposit has become a major obstacle. For many individuals, it can take over a decade to save the standard 20% deposit required for a home loan. On top of that, tightening lending policies and higher serviceability thresholds have made it harder to qualify for the loan amount needed to purchase a suitable property.

In this context, traditional solo homeownership is increasingly out of reach for many Australians. As a result, more people are turning to co-buying as a viable solution. By teaming up with a partner, family member, or friend, prospective buyers can pool their resources, reduce their financial burden, and enter the property market sooner.

What Is Co-Buying?

Co-buying refers to the process of purchasing a property with another person or group of people. All parties involved become co-owners of the property, and depending on the loan structure chosen, they may also share financial responsibility for the mortgage.

This approach is gaining traction as it allows individuals to combine their savings for a deposit and consolidate their incomes to increase borrowing power. It also spreads out the cost of repayments, making the monthly mortgage more manageable for each participant.

There are two main types of loan structures available for co-buyers:

• Joint Loans

• Individual (Property Share) Loans
  
  

Each structure has its own benefits and risks, and choosing the right one depends on your relationship with your co-buyer and your long-term financial goals.

Joint Loans Explained

In a joint loan, all applicants are listed on a single mortgage and on the property title. This means that each party is jointly and equally responsible for the entire loan. If two people take out a $1 million joint loan, for example, each is liable for repaying the full $1 million, not just their half.

Advantages:

• Incomes are combined, increasing the total borrowing capacity.

• The deposit is shared, reducing the individual savings required.

• Repayments are shared, making home ownership more affordable for each co-borrower.
  
  

Disadvantages:

• All borrowers are equally responsible for the full loan amount. If one party defaults, the others must cover the shortfall.

• Each person's credit history affects the application and loan conditions.

• Future borrowing capacity may be reduced, as the full debt is often recorded against each borrower.

Joint loans work well when there is a strong level of trust and long-term commitment between the borrowers, such as with couples or close family members.

Individual (Property Share) Loans

Individual, or property share loans, allow each co-owner to take out a separate mortgage for their portion of the property. Ownership shares are usually formalised under a 'tenants in common' arrangement, which allows each party to have a defined share (e.g. 60/40 or 50/50) of the home.

Advantages:

• Each co-buyer is responsible only for their own loan and share of the property.

• Borrowers can tailor their loan products to suit their own needs and financial situations.

• Credit liability and future borrowing power are not directly impacted by the other co-buyer’s loan.
  
  

Disadvantages:

• Although loans are separate, the entire property is still used as security, meaning one party’s financial issues could affect the other.

• Legal agreements are strongly recommended to clarify responsibilities and procedures in the event of default, sale, or exit.

• Each borrower must still meet standard lending criteria individually, including deposit, serviceability, and credit assessment.
  
  

This structure is particularly useful for friends, siblings, or unrelated parties entering a co-ownership arrangement, as it offers more financial independence while still enabling collaborative purchasing.

Why Co-Buying Makes Sense Today

Given the ongoing rise in property prices and the high cost of entry into the market, co-buying is becoming an increasingly practical option. It can dramatically shorten the time required to save a deposit, improve access to better locations or properties, and ease the pressure of monthly repayments by sharing the load.

In short, co-buying is more than a workaround – it’s a strategic pathway to homeownership that opens the door for many Australians who may otherwise remain locked out of the market.

Get Expert Guidance from Frontier Finance Co.

If you're considering co-buying a property, it's vital to choose the right loan structure and lender to suit your circumstances. At Frontier Finance Co., we specialise in helping Australians navigate the complexities of home loans, including joint and property share loan options.

Our experienced mortgage brokers can help you explore your borrowing power, assess the most suitable structure for your needs, and support you in securing a competitive loan.

Contact Frontier Finance Co. today to discuss how co-buying could help you get into the property market sooner. Let us guide you through the process and help you take the next step toward home ownership with confidence.