There are different ways to finance the purchase of a new home. If you don’t have enough money, the traditional way is to take out a mortgage. If you want, you may also share home ownership with a partner.
Buying a house with a partner (which can be a friend or a family member) requires you to first establish the form of joint ownership you’ll have. This can be beneficial joint tenancy or tenancy in common.
Beneficial joint tenants
As beneficial joint tenants, you and your partner serve as a single owner. None of you own individual shares, though. You cannot even include your share in a will. In the event of your death, your partner owns your interests automatically.
Tenancy in common
As tenants in common, you own a specific share of the property’s value. You have the option to sell, give away, or mortgage this share. Upon your death, you can pass it to a beneficiary stated in your will. In case you need to do some home improvements, though, you need to resolve how you’ll finance the project. Whether you’ll spend your own money or take out a homeowner loan, prepare an agreement stating your financial obligations. Apart from taking out homeowner loans or any other mortgages, the agreement should also settle how you’ll handle taxes as well as the maintenance expenses for common areas.
Both of these options have their advantages. Before deciding if shared ownership is for you, though, do some research to understand its legal implications.