Co-purchase plans make it easy to buy your first Edmonton home

Having a room-mate is not a new concept.  It’s a way of sharing a space and sharing expenses and for some, it’s the only way they can afford to live especially when they’re just starting out in life.

Sharing not only a home but a mortgage with someone who is not a relative or a spouse/partner is another alternative for young people who want to buy a home but find it difficult to do it on their own.

Reasons to co-buy in Edmonton

When people pool their resources they have more power to get in on a good property.  A larger home, a home in a great neighbourhood or an historic property with excellent potential. 

An RBC Home Ownership Poll conducted this year, 24% of younger buyers would likely consider purchasing a home with a relative.  This is in contrast to 13% of the population at large. At least 24% of younger buyers would also consider buying a home with a friend, as opposed to just 9% of the general population.

The poll also uncovered the escalating number of buyers who are female and single who want to purchase but don’t have a partner.  Often the only way to buy into the market is to co-buy with a friend.

How easy is it?

From a mortgage lenders perspective, purchasing a home with another person who is not a spouse or partner is no different than purchasing a home with legally married spouse.  The income requirements and debt load of all people on title is taken into account.

Saving for a down payment as a single person can be difficult, particularly if home prices are rising faster than an individual’s ability to save and keep up with the market.  With young people out of university and paying off student loans, co-buying is a popular option.

Especially now with new CMHC lending rules in which people must qualify at a higher interest rate if they have a down payment of 20% or less, individuals who can pool their resources to buy are at an advantage.

How to organize a co-purchase opportunity

• For those wanting to co-buy a home but are having difficultly finding a reliable and trustworthy friend with the resources to pursue this option, there are a few things you can do.
• Bring up the topic within your circle of influence and get the word out that you are looking to buy.
• Talk to your real estate professional and let them know that you are looking.  They may find someone in similar circumstances to yours.
• Meet with a mortgage lender and talk to them about what you can afford. Let them know of your intentions as well.  If you are uncertain about who to meet with, your Realtor can assist you.
• If you have someone in mind who is willing to enter into an agreement with you, meet together with a lawyer and have them prepare a document that stipulates the terms of your arrangement. 
• After you have taken the proper steps to prepare, go house hunting.
• Move into your new house.
• When adequate time has passed, sell and cash in on your investment.

Certainly there are risks to purchasing a home in this manner.  It’s can be a little harrowing to be financially dependent upon someone else.  The same holds true if you purchase a home with a relative or spouse.  Circumstances can change, jobs can be lost, people can become ill.  Preparing for potential risks can help mitigate damage to relationships and possible financial ruin. The positives can outweigh the negatives with a little planning for the future.