Would you share a mortgage with a friend or family
Home buyers face extreme hurdles entering the Australian property market because of high house and apartment prices in our capital cities. A twenty per cent deposit on a house in Sydney, Melbourne or Brisbane can be hundreds of thousands of dollars. That makes the task of breaking into the property market difficult for all but the uber-rich.
Now, increasing numbers of borrowers are recruiting friends and family to help them share the financial burden of saving a deposit and repaying a home loan. New research from Australia’s biggest mortgage lender, the Commonwealth Bank, indicates that more Australians are “group borrowing” to fund “collaborative living arrangements.” The Commonwealth Bank says group borrowing could become a standard “pathway to home ownership” in the future.
What is group borrowing?
Group borrowing is two or more people, who are not married or in a marriage-like relationship, sharing the cost and responsibility of a home loan. Group borrowing arrangements might involve friends or perhaps family (brothers, sisters, parents and children, cousins etc.).
The Commonwealth Bank says the number of mortgage applications with two or more applicants has increased significantly over the past couple of years. The banks says “multi-generational living” is becoming a more permanent arrangement.
Other group borrowing arrangements might include syndicates or other forms of pooling and joint ventures to buy and develop land.
Loan guarantees are also on the rise. Many parents guarantee home loans for their children to enable them to afford a home loan. Commonwealth Bank expects to see more use of guarantees in home loans in coming years.
What is collaborative living?
Collaborative living means developing smaller apartments and sharing some features with other residents of the same development. Collaborative living means smaller dwellings with shared storage spaces, laundries, yards, garages and communal areas. The Commonwealth Bank says that within 15 years the average new dwelling will be about half the size of the average house today. Housing will be shared by affordable “communities in common.”
How can I find an affordable home loan?
Many banks and other lenders will support group borrowing and loan guarantees from parents. However you still need to shop around and compare deals to find a good, affordable home loan from a reputable lender.
Right now, InfoChoice lists hundreds of home loans from more than 100 Australian banks, credit unions and building societies.
What is the lowest home loan rate in Australia right now?
The lowest home loan rate now available for owner-occupiers is 3.44 per cent (comparison rate 3.44 per cent) from Mortgage House – Pure & simple home loan.
For property investors, the lowest variable home loan rate now available is 3.73 per cent (comparison rate 3.88 per cent) from Mortgage House – Advantage home loan 80.
Compare home loans today.