CEO's Message Feb16

The rising cost of living and property appreciation has boosted the number of people entering into homeownership in partnership with a romantic partner, family member or a friend. It means more easily reaching the affordability levels demanded by the banks and diminishes the individual exposure to risk by sharing the whole experience.

Currently bonds average between R950000 and R1 million, meaning applicants must have a gross salary of approximately R30000 - many South Africans fall far below that salary bracket but still dream of homeownership.

The great thing about entering a partnership is that it allows both parties to contribute towards the deposit, bond repayments and other financial responsibilities. It also means joint responsibility for any financial penalties from late or skipped repayments, so understanding the implications of homeownership is essential.

Our advice to you, before entering any partnership, is to ensure that there is a signed agreement in writing stipulating each party’s responsibilities and how certain situations will be resolved. The most important factors that need to be established is what each party wants from the venture; how long they plan to live together and what happens if one wants to sell their share. 

Both parties must also keep a record of all the documents and payments made relating to their jointly owned property because if one person defaults, the bank holds all parties liable for the debt. In essence, the relationship must be based on complete trust and honesty where financial matters can be openly and freely discussed.

The opportunity to purchase with a partner is a great one, however a clear outline of the pros and cons, as well as the processes involved need to be clearly outlined upfront. For neutral guidance and opinion, talk to your appointed sales agent.