Johannesburg – It is often said that two is company and three is a crowd. Imagine more than two people owning a piece of property and enjoying the same rights on the house.
Well, that is now a reality after banking giant FNB this week launched a groundbreaking product that allows up to 12 members to buy property as a collective for residential purposes. Lee Mhlongo, the CEO of FNB Property Finance, says the advantages of buying property collectively with friends and family means that customers are now able to share the costs equally to make the purchase and the process affordable.
Another advantage flagged by the lender is that customers will also enjoy reduced monthly repayments and personalised rates.
“We urge customers to take advantage of buying as a collective and start their journey to own property. “Customers that fall within the ‘gap housing market’ whose income is between R3 501-R22 000 are still encouraged to consider FLISP, a government home-ownership assistance programme.
“The benefit of a cash contribution from such a programmecan significantly reduce the financial burden on households,” Mhlongo concludes.
What FNB will consider before approving applications:
• The bank will review each customer’s credit profile including the nature of income, expenses, household size and affordability.
• These will be assessed in conjunction with credit bureau profiles and the information on the account conduct with various creditors and banks.
• The solution allows for customers to elect and deposit funds directly into one transactional account and to run debit orders or to request a stop order payment from their transactional accounts. While the excitement of banding together in such a life-changing moment can put everyone on a bit of a high, you need to plan for situations in which things might go wrong.
One of the options to consider is to have a co-ownership agreement in place with the help of a conveyancer. The agreement should set out how the costs of maintenance and insurances are divided, as well as how sale proceeds will be divided if the property is sold.
Another key matter that will need to be addressed is that each co-owner should have an up-to-date will that specifi es who inherits their stake.
Below we point out some advantages of having more people buying property together:
• It may be easier for you to qualify for a joint bond if on your own you cannot qualify for the dream house
• The home loan can be paid off much faster if the co-owners agree to pay more money a month . • Maintenance, levies, rates and taxes can be shared.
Disadvantages:
• Relationships break down.
• You will not have sole control over what happens to the house.
You and your friends will all have an ownership interest and you won’t be able to sell or remodel without getting their input.
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