A key advantage of co-ownership housing is that co-owners can draw on their collective financial resources to help afford a home.

Sharing costs

These resources include the portion of their savings that co-owners can contribute to a down payment and any immediate repairs and renovations that need to be done on the house.

If the co-owners can provide a down payment of 20% or more toward the purchase price, they don’t have to pay for mortgage insurance costs.

Depending on what the co-owners have agreed to, they may contribute to the down payment, mortgage and ongoing costs equally or contribute in varying percentage amounts. The agreed-upon contributions may depend on the savings and income available to each co-owner.

To arrange for mortgage financing, the financial institution will need information from each of the co-owners, including :

  • income
  • existing assets and debts
  • credit history

Joint and several liability

Unless a corporate ownership structure is established, the co-owners hold a single mortgage with “joint and several liability.”

With “joint and several liability,” the financial institution can make a full claim against any one person, and then that person would seek compensation from the other people who participated in the mortgage.

As with other homeowners, the financial institution’s primary way of addressing any default on the mortgage by co-owners is to take possession of the home.

To protect yourselves, a best practice is for co-owners to maintain a joint bank account with an amount of money equal to the next three months’ worth of mortgage payments. If a problem arises, there is time to address it before there is a default with the financial institution.

Corporate ownership

In the case of a corporate ownership structure, the corporation holds the mortgage.

A corporate ownership structure could make it easier for co-owners to exit their share of the home and new co-owners to join without requiring refinancing of the home (which can be difficult for a group of individual co-owners to obtain).

A corporate mortgage is often more complex to establish and is charged a higher interest rate.