Joint Home Loans: What You Need to Know Before Buying Together

Buying a home with someone else, whether a partner, family member, or close friend, is an increasingly common path to homeownership in New Zealand, particularly as property prices have made it harder for individuals to purchase alone. A joint home loan can make the numbers work in ways they would not individually. But it also means sharing a significant financial and legal commitment, and the implications of that are worth understanding clearly before you proceed. At Chaperone, we regularly help people navigate joint borrowing arrangements and the questions that come with them.

How Joint Home Loans Work

A joint home loan is a mortgage taken out by two or more borrowers together. All borrowers are jointly and severally liable for the debt, which means the lender can pursue any one of the borrowers for the full amount if repayments are not made. This is not a situation where each person is responsible for their own share. If one borrower stops contributing and the other does not make up the difference, both borrowers' credit files will be affected.

From a lender's perspective, joint borrowing often strengthens an application because the combined income is assessed. However, the combined liabilities are also assessed, so it does not automatically lead to a larger loan. Each borrower's financial position, credit history, and existing debts will be scrutinised.

Ownership Structure: Joint Tenants vs Tenants in Common

When two people buy property together in New Zealand, they need to choose how ownership is structured on the title. The two main options are joint tenancy and tenancy in common. Under joint tenancy, both owners hold an equal undivided share in the property and there is a right of survivorship, meaning if one owner dies, their share automatically passes to the other. Under tenancy in common, each owner holds a defined percentage share, which can be equal or unequal, and that share can be passed to someone else through a will.

The right structure depends on your relationship with the co-buyer, your respective financial contributions, and your estate planning intentions. A property solicitor can advise on what is appropriate for your circumstances.

The Property (Relationships) Act 1976

For couples in New Zealand, the Property (Relationships) Act 1976 (PRA) is highly relevant. In general terms, relationship property, which includes the family home, is split equally between partners after three years of living together, regardless of who paid the deposit or whose name is on the mortgage. This means that financial contributions made before the relationship or with pre-relationship assets can be at risk unless steps are taken to protect them. A contracting out agreement (commonly called a pre-nup in everyday language) can be used to set different terms, but it must be drawn up by a solicitor with independent legal advice for both parties.

What Happens If Circumstances Change?

Life does not always go to plan, and one of the most important things to think through before taking out a joint mortgage is what happens if the arrangement needs to change. Common scenarios include relationship breakdown, one borrower wanting to sell and the other wanting to keep the property, one borrower experiencing financial hardship, or one borrower wanting to buy out the other.

None of these situations are straightforward when a joint mortgage is involved. Removing a borrower from a mortgage requires the lender's consent, and the remaining borrower will need to demonstrate they can service the loan independently. It is worth having a conversation before you buy about how you would handle these scenarios, even if you hope they never arise.

Co-Ownership Agreements

If you are buying with someone other than a partner in a de facto or married relationship, such as a sibling, friend, or parent, a co-ownership agreement is strongly recommended. This is a legal document that sets out each party's contribution to the deposit, how mortgage repayments are split, what happens if one party wants to exit, and how disputes are resolved. Without one, disagreements can become very difficult and costly to resolve. A property solicitor can draft a co-ownership agreement tailored to your arrangement.

Key Questions to Discuss Before Proceeding

• How will the mortgage repayments be split, and what happens if one person cannot contribute?
• What ownership structure suits your situation and intentions?
• Have you discussed what you would do if the relationship or arrangement changed?
• Do you need a co-ownership agreement or a contracting out agreement?
• Are both parties' credit histories in good shape for a joint application?

At Chaperone, we can help you think through the financial aspects of buying together and connect you with the right legal and advisory support to make sure the arrangement is structured well from the start.