Buying a house - with your BFF

Hey girlfriend, let’s buy a house together!

Sick of shelling out rent for someone else’s mortgage, or waiting for the “right guy” to go halves with? With the recent bump in the government’s First Home Owners Grant to $14,000, a rising number of single women are shacking up together to get into the property market. “[It’s] a great way to build equity (read: ownership status), so it’ll be easier to buy your own place later on,” says Graham Joyce, deputy president of the Real Estate Institute of Australia.

What’s so great about it?
Women make 84 per cent of the decisions in property settlements, so with two chicks in control, you’ll be a force to be reckoned with on the auction circuit. And then there’s the solidity of female friendship. “You may have known your boyfriend for a few years, but you’ve probably known your friend for 10 years – there’s much greater stability,” says Jeremy Levitt, co-director of PodProperty, a Sydney-based company that specialises in helping friends (or even strangers) team up to buy their own place.

Must-have: a binding contract
Think pre-nup for mortgage mates. It’s highly recommended you get a co-ownership agreement – a legally binding document drawn up by a solicitor. It gives you protection should the deal turn sour. “The agreement sets the ground rules, covering everything from what happens if one of you defaults on your repayments (or wants out), to who’s allowed to stay over, to who forks out if the property needs maintenance,” Levitt says. You can write a clear exit strategy into it, so if you sign on for five years you won’t be liable if your mate does a runner after three months. She’ll be legally obliged to cough up cash.

Where do we start?
Research. Familiarise yourself with the market (and the area you want to buy in) and work with a mortgage broker to find out your borrowing potential. “Borrowing more than you can afford to repay is the biggest danger,” says Jerome Bleijie, general manager of Mortgage Wealth with the Commonwealth Bank. “We recommend that repayments and other commitments don’t exceed 40 per cent of gross income.” If you’re buying with a friend, this figure should be based on the person with the lowest income.

So, what’s next?
When you’ve found a place, you need to organise an inspection (to check for termites, etc) and arrange conveyancing (a solicitor to check it’s all legal). If you buy privately, there’s a cooling-off period, so you can bail if necessary. If you big at auction, you have to pay the deposit up front – no cooling-off allowed. You’ll then need to insure the property and wait for settlement to be finalised (which can take up to six weeks). OK – now you can crack the bubbly!