Can I Buy a Home With Friends?
Getting on the property ladder in New Zealand remains a tough ask—especially for first home buyers. Even as house prices have softened, saving a deposit and meeting lending criteria can be overwhelming. One option more Kiwis are considering is teaming up with friends to purchase a home. It’s doable, but not without risk.
If you're thinking about buying a home with friends, you’ll need more than shared goals and a good relationship. You’ll need the right legal setup, a well-drafted co-ownership agreement, and honest conversations before you even start house hunting.
Here’s what you need to know.
Understanding How Ownership Works: Joint Tenancy vs Tenants in Common
Before you get into loan applications, you need to choose a legal ownership structure. In New Zealand, the two most common options are Joint Tenancy and Tenants in Common.
What Is Joint Tenancy?
Under joint tenancy, all owners share equal ownership of the property. Everyone is responsible for the full mortgage, and if one owner passes away, their share automatically transfers to the surviving owners.
Pros:
Simple to set up
Right of survivorship simplifies inheritance
Encourages shared financial responsibility
Cons:
No control over passing on your share through a will
Any decision requires agreement from all parties
Credit issues or payment defaults from one person can impact everyone
What Is Tenants in Common?
This structure allows each person to own a defined share of the property—say, 60/40 or 33/33/34. Owners can choose how much they contribute and retain individual control over their share. If an owner passes away, their share is handled through their will.
Pros:
Each owner can tailor their share to match their financial input
No automatic transfer of ownership—each person’s share can be inherited
Suitable when contributions (or risk tolerances) vary
Cons:
More complex to manage and set up
Disagreements are common if expectations aren’t clearly outlined
Selling or refinancing requires everyone’s cooperation
Why Buy With Friends?
Buying a home with friends is primarily about accessibility. House prices can rise faster than you can save, so pooling resources gets you in the market sooner.
Other benefits include:
Larger deposit, which can unlock better mortgage terms
Shared costs, such as rates, insurance, and maintenance
Investment potential, especially in rising markets
Supportive living environment, if you’re sharing the home
What Are the Risks?
It’s easy to focus on the upside—but co-ownership also comes with serious risks.
Financial fallout if someone can’t meet their share of the mortgage
Relationship strain, especially if disagreements emerge
Limited flexibility when one person wants to exit
Legal complications, particularly if expectations weren’t documented early on
It’s also worth noting that banks see lending to groups of friends as higher risk than to couples or individuals. And if someone loses their job or gets into financial difficulty, the other co-owners will be liable to cover their share of the loan.
How Do Mortgages Work When Buying With Friends?
In most cases, banks will require all borrowers to be able to service the entire mortgage. This means that even if you only plan to pay half, the bank wants to see that you could (in theory) pay 100% if your friend couldn’t.
There are a couple of exceptions—some banks will consider tenants-in-common structures and assess each person’s portion separately. But these options are rare and often depend on the overall strength of the application.
To boost your chances of approval:
Have at least a 20% deposit between you
Present a formal co-ownership agreement
Show that most applicants have strong income and credit history
A Real-World Example
Peter, Paul, and Mary want to buy a house together. Peter and Paul will live in it; Mary is contributing financially but won’t move in. They agree to split ownership equally (one-third each) and choose a bank that allows tenants-in-common ownership.
But here’s where it gets tricky:
Mary is treated as an investor, so the loan structure may be subject to tighter lending rules (such as a 60% LVR instead of 80%)
If Mary later wants to buy a home with her future partner, her borrowing power could be significantly reduced, as other banks will assess her as being responsible for the full mortgage
If she needs to exit, it may be difficult to extract her share without selling or refinancing
Could Mary Just Loan the Money Instead?
Possibly—but it requires careful planning. If Mary wanted to loan Peter and Paul $100,000 to help reduce their loan, she’d need to:
Decide whether she’s expecting a return or ownership
Understand that repayment may not be easy or quick
Possibly wait until after the mortgage has settled (most banks won’t accept loans from friends as a valid deposit source)
This setup should always be documented legally with the help of a solicitor.
Questions You Need to Answer Before Buying With Friends
Before you sign anything, sit down together and work through these key topics:
What happens if someone wants out?
Who pays for maintenance, repairs, or rates?
Can flatmates or partners move in?
Will insurance cover one owner if they die or fall ill?
What if the house drops in value before you sell?
Are all co-owners keeping their wills up to date?
Documenting this in a co-ownership agreement isn’t just recommended—it’s essential.
Tips for a Successful Co-Ownership
Communicate openly – Set expectations early and revisit them regularly.
Get legal advice – Especially on structuring ownership and planning for exits.
Put everything in writing – Your agreement should cover contributions, decision-making, disputes, and what happens if someone wants out.
Be realistic – Life changes. Relationships shift. Careers evolve. Make sure your arrangement can adapt with you.
Buying a house with friends can absolutely work. But it requires more than shared enthusiasm and good intentions. With the right planning, the right structure, and the right support, it can be a stepping stone into the property market—not a future headache.
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