Joint home ownership in Canada can be a great way to pool resources and buy a property that you may not be able to afford on your own. However, there are also some potential downsides to consider before taking the plunge. In this article, we’ll take a look at some of the pros and cons of joint home ownership so you can make an informed decision about whether it’s right for you.
Understanding Joint Ownership in Canada
In Canada, joint ownership of property can take one of two forms: joint tenancy and tenancy in common. The main difference between the two is that joint tenancy includes a right of survivorship, while tenancy in common does not.
What does this mean? If one joint tenant dies, the other tenant(s) will automatically inherit their interest in the property. With tenancy in common, on the other hand, each tenant owns a specific percentage of the property and can leave their interest to whomever they choose in their will.
Joint ownership with the right of survivorship is the most common form of joint ownership in Canada.
The Pros of Joint Home Ownership
There are several potential benefits to joint home ownership, including:
1. You Can Afford a More Expensive Property
If you’re looking to buy a property that’s out of your price range on your own, joint ownership can help you make your dream a reality. By pooling your resources with a friend or family member, you can afford a more expensive property than you could on your own.
2. You Can Qualify for a Larger Mortgage
When you apply for a mortgage, the lender will consider your income, debts, and credit score, as well as the value of the property you’re looking to buy. If you’re buying with someone else, the lender will take their financial information into account as well. This can help you qualify for a larger mortgage and buy a more expensive property.
3. You Can Get a Lower Interest Rate
When you apply for a mortgage, the lender will consider your income, debts, and credit score, as well as the value of the property you’re looking to buy. If you’re buying with someone else, the lender will take their financial information into account as well. This can help you qualify for a lower interest rate and save money over the life of your loan.
4. No Probate Tax
If you’re buying a property with someone else, the property will be jointly owned. This means that if one of you dies, the other will automatically inherit the property. This can help avoid probate tax, which can be expensive.
The Cons of Joint Home Ownership
Aside from the pros, there are also some disadvantages to joint ownership that you should be aware of:
1. You’re Both Responsible for the Mortgage
If you’re buying with someone else, you’ll both be responsible for making the mortgage payments. If one of you can’t make the payments, the other will have to make up the difference. This can be a financial burden, especially if you’re not expecting it.
2. You’re Both Responsible for the Property Taxes
You’ll also both be responsible for paying the property taxes. This can be a burden if one of you can’t pay your share.
3. You May Have to Sell the Property if One of You Wants to Move
If one of you wants to move, you may have to sell the property. This can be difficult, especially if you can’t find a buyer who is willing to pay what you owe on the mortgage.
4. You May Not Be Able to Get a Mortgage
If you’re buying with someone else, the lender may not be willing to give you a mortgage. This can be a problem if you need a mortgage to buy the property.
There are many things to consider before making the decision to purchase a home with another person. If you are considering joint home ownership, be sure to communicate openly with your partner about your expectations, goals, and financial situation. Ultimately, the decision to purchase a home with another person is a personal one that should be made after careful consideration of all factors involved.
Ontario Wills & Estate Plans is here to help you determine what’s the best legal option for protecting your estate. By working with us, you get quality legal advice from some of the best Ottawa estate planning lawyers in our firm. Contact us today to schedule an appointment!