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Ask Can Can Girls

Our panel of Can Can Girls will answer your questions

The panel presently consists of:

  Lynnette            Sharon            Tracey              Deb
   Finance            Coping with        Weight        Life Insurance
and Property          Allergies       Management     & Kiwisaver

Ask your question here!  (Available for all members - remember membership is FREE!) 
All questions will be answered, and the best questions will be posted.  All posted questions win a chocolate prize!!  If we haven't got a panel expert on your subject - we will find one - we're not Can Can Girls for nothing you know!!!!

My pre-approval for a home loan isn't big enough to buy a house in the area where I live - should I go shares with a friend?

Lynnette answers:
There are a few options you could take - depending on your situation.  An easy way to improve your income, and therefore your buying power, is to look at having a boarder or flatmate.  If you have children, this might not be entirely suitable, however this way the house, and its responsibility, is entirely yours.  When a lender is assessing the income brought in by a boarder, they may not use the full amount to help service your loan.  This reflects the truth that many times a boarder situation does not work out to be permanent, and it is something that you should keep in mind also.  How likely are you to be able to find another boarder if the first one does not work out?  How much will an extra person in the house increase the household expenses?  How would an extra adult in the house affect your family dynamic?

The other option is to buy a home in conjunction with someone else that you know who is in the same situation as you - maybe a friend or a relative.  If purchasing a home in partnership with another person who is not your partner, ask your legal adviser about 'tenants in common' as an ownership structure. Before you actually purchase a home, your co-buyer and yourself should map out the 'rules'.  I would suggest that you agree to a set period that the house is being owned for, and HOW the co-owner relationship will end.  For example, you may decide together that you wish to own the house for 2 years, and at that time, one of you will buy the other out, or the house will be sold, hopefully freeing up a deposit for both of you.  At that point, you may both decide to continue with the house for longer, however if one of you wish to go, the other will have to agree as per the terms of the original agreement.  The agreement will also cover HOW the proceeds of a sale will be split, or if being sold to one of the original parties, it will cover how the value of the property will be determined - usually by registered valuation.  Your agreement should also cover what happens should one party default on their share of the payments - it is important to know that the other party can be relied upon to meet their part of the financial commitment, because you will be liable for their share if they struggle.  These agreements are not dissimilar to a pre-nuptial, and are best left to the experts.  Have your lawyer draw one up for you.

A spin on this option might also to be to look for a home that has TWO dwellings, even if they are not legally separate - it will give the two parties separation in their day to day lives that will lessen the stress that a co-owner relationship could possibly otherwise cause. 

Two dwellings might also refer you back to the first option of buying the house by yourself, with the second dwelling's rent increasing your ability to service the loan.  In this situation, having the second dwelling permitted as such would have a distinct advantage, and once again, not all of your rental income will be used by the lender when they check your affordability.  This reflects the expenses that come from becoming a landlord - such as vacancies, lost rents, and/or property manager fees.

In short - there are often ways of achieving what you set out to achieve, if you want it bad enough.  Or alternatively - you could ask for a pay rise, or look for a more affordable area to live!!!!

 
 
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