A property share loan lets co-buyers arrange separate borrowing against the same property. Separate accounts help you manage repayments, but guarantees and shared security can expose you to another owner’s default.
Before buying with a friend or relative, establish what you own and what you promise the lender. A private agreement between owners cannot remove obligations in signed loan and guarantee documents.
How a Property Share Loan Works
A property share home loan can divide borrowing into separate loan portions while one property secures the arrangement. Each borrower manages the repayments on their own account under the lender’s approved structure.
The account balance shows the debt recorded against that account. The loan contract identifies who must repay it. A guarantee can create an obligation for another person’s debt, while a mortgage gives the lender rights over the property.
Splitting one joint loan into fixed and variable accounts does not, by itself, separate the borrowers’ legal liability. ANZ’s explanation of co-borrowing says each co-borrower is liable for the entire outstanding loan. This is called joint and several liability.
For a separate-loan arrangement, read both the borrowing and guarantee terms before deciding how far your exposure extends. An ownership percentage alone does not set the amount the lender can recover from you.
This is private co-ownership. Government participation belongs to shared equity home loans. A relative using their property to support your purchase involves a different family guarantee arrangement.
Check Guarantees and Shared Security
Cross-guarantees mean co-owners support each other’s borrowing, so a default can put the shared home at risk even when your own repayments are current.
CommBank’s Property Share guide requires owners to guarantee each other’s loans as security support. It warns that an unpaid loan can ultimately lead to sale of the property securing both loans. The signed guarantee determines your obligations and any limit.
Consider this hypothetical purchase, excluding buying costs. Priya and Sam buy an $800,000 home as tenants in common, with agreed ownership of 60% and 40%.
| Co-owner | Purchase share | Cash contribution | Separate borrowing |
|---|---|---|---|
| Priya | 60% ($480,000) | $120,000 | $360,000 |
| Sam | 40% ($320,000) | $40,000 | $280,000 |
If Sam loses income, his $280,000 account still needs repayments. Priya paying her own $360,000 loan does not protect the home from enforcement of shared security. Her additional payment obligations depend on the guarantee she signed.
The 60/40 title split does not reserve 60% of the sale proceeds for Priya ahead of the mortgage. Secured debt and sale costs affect what remains for owners. Their agreement needs to address losses as well as gains.
Ask your lawyer to explain the guarantee’s amount, the security covered and when the lender can enforce it. Obtain the lender’s written release conditions too. Repaying your own account or agreeing privately to leave does not itself release a guarantee.
Choose Title and Document the Agreement
Joint tenancy and tenants in common describe ownership of the property. Neither title choice replaces the loan contract or limits a guarantee automatically.
Landgate’s tenancy guide explains that joint tenants have equal interests in the whole property. Survivorship means a deceased joint tenant’s interest passes to the surviving joint tenants.
Tenants in common hold defined shares, which can be unequal. A deceased owner’s share forms part of their estate and passes under their will or the applicable intestacy rules. A 60/40 interest is an undivided share of the property, not ownership of particular rooms.
Discuss the intended title with a solicitor or conveyancer before signing the purchase contract. Have your lawyer prepare a co-ownership agreement covering the decisions below.
- Record ownership percentages, deposits and buying costs. Say how later extra repayments or renovation contributions affect the amount each owner receives.
- Allocate repayments, rates, insurance and repairs. Set a payment process and a response to missed contributions.
- Agree who can live in the home, whether it can be rented and how decisions about renovations or further borrowing are made.
- Set a dispute process and address death or incapacity alongside each owner’s estate plan.
- Define notice periods for leaving, how a buyout price is calculated and what happens if nobody can finance the buyout.
Moneysmart’s guidance on buying together recommends agreeing on ownership, costs and future decisions before purchase. The lawyer must also explain how the agreement works alongside the lender’s documents.
Confirm Which Lenders Accept the Structure
CommBank has a named Property Share option. Other lenders’ joint borrowing arrangements need to be assessed on their own terms, because joint borrowing can leave each borrower liable for the whole debt.
The CommBank Property Share page allows up to two home loan applications per security. Each application can include multiple borrowers or loan products. Every borrower must own the property and demonstrate repayment capacity for their own portion.
CommBank requires mutual security guarantees, legal advice and a signed statutory declaration. Third-party guarantors are excluded from this arrangement. The product page also excludes business purposes, bridging, land purchase and construction loans.
For an ANZ property share loan enquiry, distinguish a proposed separate-loan structure from ordinary co-borrowing. ANZ’s published co-borrower obligations make each borrower responsible for the full debt. NAB’s co-borrowing guide similarly explains that another borrower must cover a repayment when one cannot contribute.
For a Westpac property share loan enquiry, ask whether the proposed loan has joint borrowers or separate borrowers with guarantees. Westpac’s guide to keeping or selling a shared home explains that removing an owner from a loan can require refinancing. A private decision about ownership does not complete that process.
Give the lender or broker each owner’s contribution and proposed borrowing amount. Ask for written answers on these points before choosing a structure.
- Which combinations of owners, borrowers and guarantors does the lender accept?
- Does each account have separate borrowers, and what debt does each person guarantee?
- How does the lender assess repayments and existing debts for each applicant?
- Which changes require every owner’s consent, and what must happen to release an owner or guarantee?
Plan a Buyout, Refinance or Sale
A co-owner exits through a transfer or sale, with lender approval needed to release borrowing or guarantee obligations. A co-ownership agreement can set the process between owners, but cannot require the bank to accept a replacement borrower.
For a buyout, start with the agreed valuation process and calculate the departing owner’s entitlement under the agreement. Purchase-price percentages alone may give the wrong result after repayments, extra contributions or a change in value.
- Obtain a valuation and establish the payout, remaining debt and transaction costs.
- Have the lender assess whether the remaining owner can support the proposed debt. A refinance might be needed to fund the buyout and replace the original arrangements.
- Ask a solicitor or conveyancer to coordinate the transfer with the loan settlement and any guarantee release.
- Get tax advice before agreeing to the transfer price. Check transfer duty with the relevant state or territory revenue authority.
The ATO’s property-transfer guidance explains when market value must be used for capital gains tax on transfers to family or friends. A discounted buyout does not automatically remove tax consequences.
If a buyout cannot be financed, the agreement needs a workable sale process and a way to resolve disagreement. Before treating the exit as complete, obtain written confirmation that the departing owner is released from the relevant loan and guarantee obligations.
