We talked recently about the growing numbers of families in multi-generational living situations. If that sounds like a good fit for you and extended family members, there are some things to keep in mind – logistically and financially – when deciding to buy a home together.
Determine what everyone is looking for in this new arrangement. It’s likely you all have a list of must-haves and won’t-accepts. While there may be some differences, it’s best to get on the same page early on and know what kind of home will work best for the relationships and number of people the house needs to accommodate. As long as it’s a family decision up front, perhaps conflicts later can be avoided.
Consider building a new home. Older houses are less likely to have the layout you’re seeking for multi-generational living and would be expensive to renovate. New construction can be customized to meet some of those “must-haves.”
The combined buying power that results from the adults in the family all contributing to the purchase of the home is a real benefit. The obvious advantage is that you can likely purchase a better, bigger property that would not be affordable otherwise. A realtor and mortgage broker can best advise you on the best loan option for your circumstances.
A joint loan would allow each adult or couple to own equal percentages of the home. Each party’s portion of the loan amount would be determined by the amount of money he or she contributed to the deposit.
You could also look into the possibility of holding separate loans against the same property. That is an advantage because future borrowing capacity is only affected by your portion of the loan, not the total of a joint loan for the purchase of the house.
Aside from the mortgage, there are other understanding to come to as co-owners of a property. You’ll need to determine who decides when to sell, how decisions will be made about maintenance and repairs, and anything else related to the running of the home. Sickness and job loss can create major financial stress. Just like single home owners should plan for those emergencies, family co-owners should as well.
While it may seem to be a bit formal when dealing with members of your family, think of it as a partnership agreement so that any issues can be easily resolved. Part of that agreement should also include considerations for what if scenarios. In the event that a co-owner passes away, talk about whether the other co-owner(s) inherit that person’s interest in the home. If you decide that living together is no longer necessary or practical, you’ll need to agree on if the home is sold or if one partner buys out the other. Certainly if those circumstances become reality, further discussion will be required, but it’s a good idea to talk about the possibilities even before committing to homeownership together.
We might have just the property that will work for your large family. Book a tour to see what options we offer!