HomeSource warns that the natural wish to give children a kick-start
in owning their own home may lead people to enter into contractual
arrangements without being aware of the dire consequences if things
go wrong.

The HIA/Commonwealth Bank Housing Affordability Index for the December
2006 quarter, registered the lowest affordability for housing in the 22 years
that the index has been operational.

First home buyers are now – on average – expected to spend more than
30 per cent of their disposable income just to meet minimum monthly
mortgage repayments.

As the market becomes more desperate, a common strategy for first home
buyers is to pool funds with a family member or friend to split the mortgage
and share the cost of fees, rates and utilities.

But co-ownership requires very strict ground rules and a tight contract to cover
things like friendship breakdown, one party’s need to sell, and even death. 

If these and other events are not covered, the arrangement can end
disastrously.

One industry survey found more than half of these non-traditional
partnerships involve parents and children. 

Consider the position if the young person defaults and then has to face the
parents or grandparents when their house is repossessed to pay out the
debt. It’s essential that all parties seek professional legal and financial advice
before proceeding with this type of arrangement.





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