Some Canadians are getting creative when it comes to breaking into the real estate market. In addition to borrowing money from family, taking out loans, and strict budgeting, there is also another option that is gaining popularity: Home-co-ownership.
What’s Home Co-Ownership?
Simply put, home co-ownership involves two or more people buying a home together to split costs. The idea may seem absurd to some, but this option allows prospective buyers to break into the real estate market without having to spend years scrounging for extra money to put into their savings or living on a very strict budget to fulfill their homeownership dream.
How Popular is it?
Home co-ownership has become a popular choice for many Canadians looking into breaking into the real estate market without having to cough up at least $100,000 for a downpayment. As interest rates and inflation undermine affordability, home co-ownership has been an option explored by many Canadians.
In fact, a survey conducted by Royal Lepage in August 2023 found that six percent of Canadian homeowners co-own their property with another party, not including their spouse or significant other. Within the 501 co-owners surveyed, 89 percent (the vast majority) said they co-owned with a family member, while eight percent said they co-owned with someone who is neither family nor a friend. Safe to say, with the cost of living only increasing along with high mortgage rates, we’re likely to see this statistic rise.
What are the Benefits to Co-Ownership?
Many millennials and Gen Zers are keen on getting into the market but find themselves at a crossroads. With salaries not keeping up with the rising cost of living, attempting to get into the real estate market is a huge leap for many. According to the Royal Lepage survey, 83 percent of current co-owners are between the ages of 25-34.
Co-owning with family members is what many young Canadians decide to do, as it alleviates a lot of the stress that comes with owning a property. While it is a tad inconvenient to share a space with family, divvying up the bills will help you save for a larger property later and in the location you desire. It’s also a sigh of relief to co-owners knowing that they don’t have to go through the mortgage application all on their own. Another advantage of home co-ownership includes a feeling of companionship and less loneliness, especially for those who do not have a partner or children. Lastly, co-ownership may be a desirable option for those looking to downsize their space, and expenses, especially seniors or those close to retiring.
How Do I Get Started?
Financial institutions, like credit unions, are trying to help potential homeowners realize their homeownership dreams. As home co-ownership becomes more trendy, financial institutions are finding ways to help through various programs. In Ontario, Meridian Credit Union is one of many credit unions offering co-ownership options. This credit union offers the Family and Friends Mortgage, which is a convenient way to ease the financial burden of your home purchase. This plan is very adaptable because not everyone who shares the mortgage is required to move in, rather, only one owner needs to live there. However, while not all members who purchased the home must reside in it, everyone must be liable for the mortgage.
Establishing a co-ownership agreement is another important step when it comes to co-owning a home. It provides clarity about the rights and obligations of each of the co-owners and protects everyone in the case of disputes.
Credit Unions are Here to Help
When considering home ownership, it is important to explore all of your options – including co-ownership. If you need help with your financial planning, budgeting or are looking to secure a loan or mortgage, speak to a financial advisor at your local credit union. Not yet a member? Find your nearest credit union here.