Key Takeaways

• A tenants in common title can record any ownership split, but on a joint and several loan each borrower owes the full debt, not just their share.
• Two non-partner first home buyers, such as siblings or friends, can apply together for the 5% Deposit Scheme. A parent who has owned property in the past 10 years usually makes the pair ineligible.
• A co-ownership agreement governs the owners only, while the lender still holds every borrower to the whole loan.
• Leaving usually means the remaining owner refinances alone, so testing one income against the full loan before buying matters.

Buying a house with a sibling in Australia, or with a parent or close friend, can bring a home within reach that one teaching salary may not. Two deposits and two incomes stretch further. The catch sits in the loan contract. You might own 40% of the home, yet the lender can hold you responsible for 100% of the loan.

That gap between what you own and what you owe shapes every later decision, from how the title is recorded to how one of you eventually leaves. Working through it with a first home buyer broker before the application goes in can help the arrangement hold up in difficult years as well as on settlement day.

How Joint Home Loans Work for Co-Buyers

A loan between siblings, friends or a parent and adult child is assessed much like a couple’s loan. It differs from a family guarantee, where a parent offers equity as security without going on title, a route a guarantor home loan broker can explain separately. The mechanics that matter most are:

Ownership and Debt

The title records who owns the home and in what shares, while the loan contract records who owes the lender. A title can say 70/30, yet the loan contract does not divide the debt that way.

Borrowers on Title

Lenders usually require every registered owner to also be a borrower, because the mortgage is secured over the whole property and not over one person’s share. A friend who contributes to the deposit but wants to stay off the loan generally cannot sit on title either. An ownership stake without the debt typically needs a different structure and legal guidance before the purchase.

Combined Borrowing Power

The lender assesses both applicants’ incomes, expenses and debts together. A permanent teacher co-buying with a friend who carries a large car loan may find the joint borrowing power lower than expected.

Casual and relief work, contract renewals and unpaid school holiday breaks are assessed differently from lender to lender. A self-employed sibling may need recent lodged tax returns, which can set the timeline for the whole purchase.

Deposit Checks

Lenders typically check where each applicant’s share of the deposit came from, usually by reviewing savings history on bank statements. Money gifted by a parent may need a signed gift letter confirming it is not a loan.

A co-buyer who expects their contribution to be repaid by the other may need to disclose that arrangement, since an undisclosed repayment obligation can change how the application is assessed. Policies on genuine savings differ between lenders.

Ways to Hold the Title Together

Co-owners in Australia hold property either as tenants in common or as joint tenants. For non-partner buyers, the choice usually turns on whether shares need to be unequal and what should happen to a share if an owner dies:

Tenancy in Common

Each owner’s defined share, such as 60% and 40%, forms part of their estate and passes under their will or, without one, under intestacy rules.

This structure often suits sibling, friend and parent co-purchases, because contributions are rarely identical and many people want their share to go to their own family. A sibling who later marries, for example, may want their partner or children to inherit their portion.

Joint Tenancy

The owners hold the whole property together in equal shares. When one dies, their interest passes automatically to the survivor under the right of survivorship, which overrides any will.

This can suit a parent and adult child who intend the child to inherit the home outright. Between friends, it can produce an outcome neither intended, since the deceased owner’s family receives nothing from the property.

How Co-Buyers Decide Their Ownership Split

Tenants in common can choose any split, but the number needs a basis both owners can still defend years later. The points co-buyers usually need to settle are:

Deposit Contributions

A common starting point is each person’s deposit. Where a teacher puts in $30,000 and a sibling $70,000 towards a $100,000 deposit, a 30/70 split reflects that. Because the loan is owed jointly, many co-buyers treat the deposit as the fairest measure of ownership at purchase and deal with repayments separately.

Unequal Repayments

Shares on title do not move when one person pays more of the mortgage. A friend who covers 60% of repayments for five years on a 50/50 title still owns 50% unless both owners agree to change it.

Some co-buyers credit extra repayments in the payout on exit. Others keep repayments in proportion to ownership from the start. Recording the method in writing avoids relying on memory and old bank statements later.

Upfront Costs

Upfront costs, including transfer duty (often called stamp duty), legal fees, lender fees and inspections, can be shared equally, divided in proportion to ownership or counted as part of each person’s contribution.

Changes After Settlement

Because the split is registered on the title, changing it after settlement is a new transfer of an interest in land, which may attract transfer duty, registration fees and, for some owners, capital gains tax (CGT). Settling the numbers before signing the contract of sale is usually far cheaper than correcting them afterwards.

What Joint and Several Liability Means for You

Joint and several liability means the borrowers share the debt and each is also individually liable for all of it, whatever their ownership share. Joint home loans in Australia are typically written this way. For a co-owner with a smaller share, the consequences are:

Full Debt Liability

A teacher who owns 30% of a home with a $600,000 loan is liable to the lender for the full $600,000, not $180,000.

Missed Repayments

The joint loan appears on both borrowers’ credit reports, so a missed repayment can be recorded against each of them, regardless of who was meant to pay that month. According to the Office of the Australian Information Commissioner, a payment counts as missed for credit reporting purposes when it is made more than 14 days after the due date, and that repayment history stays on a credit report for two years.

Some co-owners pay into a shared account holding a buffer of one or two months’ repayments. A short gap in one income then need not become a missed payment for both.

Debt Recovery

Where arrears continue, the lender may pursue either borrower, or both, for the whole amount owing, and may move towards selling the property under the mortgage.

Any shortfall after a sale is still owed jointly and severally, so the co-owner who kept paying can face a claim for the full balance. Recovering the other person’s portion is then a matter between the co-owners.

Future Borrowing Power

When either co-owner applies for another loan, lenders commonly count the full joint debt and full repayment against that person, not just their share. A teacher hoping to buy their own place in five years, while still on a $500,000 joint loan with a friend, may find their individual borrowing power heavily reduced. Some lenders may consider evidence that the other borrower meets their portion, but policies vary.

Government Schemes and Concessions for Co-Buyers

Siblings, friends and parents can use some federal schemes together, but ownership tests and state rules often decide whether a particular pair qualifies. The schemes and concessions co-buyers most often weigh are:

5% Deposit Scheme

Two non-partner buyers, such as siblings or friends, can apply together for the Australian Government 5% Deposit Scheme, provided both meet the eligibility criteria, according to Housing Australia’s guidance. The scheme, formerly the Home Guarantee Scheme, allows eligible first home buyers to purchase with a 5% deposit without paying Lenders Mortgage Insurance (LMI).

Since 1 October 2025, the scheme has had no income caps and unlimited places. Each applicant must be an Australian citizen or permanent resident and a first home buyer, or not have owned a home or land in Australia in the past 10 years. The home must sit at or below the location’s price cap, and the buyers must generally move in within six months of settlement and keep living there while the guarantee is active.

A parent who owns their home, or has owned a home or land in Australia in the past 10 years, would usually make a joint application ineligible, because the 10-year test applies to both applicants at the home loan date. Families in this position often compare co-buying without the scheme, which may mean a larger deposit or LMI, with the parent staying off title and offering a family guarantee. Each path carries different ownership, liability and tax outcomes for the parent.

The guarantee protects the lender, not the borrowers, so it does not reduce either co-buyer’s joint and several liability. Lender credit rules apply on top of scheme eligibility, and a no deposit home loan broker would typically check both, alongside other low-deposit pathways, before an offer is made.

This is a general guide only, and scheme criteria may change.

Help to Buy

The Australian Government Help to Buy Scheme accepts a maximum of two applicants, and all applicants must be Australian citizens. Neither applicant can own property in Australia or overseas. Housing Australia tests income using taxable income on each applicant’s Australian Taxation Office (ATO) Notice of Assessment for the previous financial year, not current payslips, and that test shapes Help to Buy eligibility on a teaching salary.

Because the government takes an equity share in the home and shares proportionally in any gain or loss, a third interest sits alongside the co-owners’ shares and must be planned for at exit. Income caps are indexed each year, so current limits can be checked on the government’s First Home Buyers website before applying.

First Home Super Saver

The First Home Super Saver Scheme is assessed for each person individually, not per property. Under the scheme, administered by the ATO, each eligible buyer may release up to $15,000 of voluntary super contributions per financial year and $50,000 in total, plus associated earnings, towards a first home deposit.

A teacher buying with a parent who already owns property may still be able to use the scheme for their own contribution, depending on their individual eligibility. These limits are a general guide only and may change.

State Duty Concessions

Each state and territory sets its own transfer duty concessions and First Home Owner Grant rules, and each treats mixed buyers differently. In some jurisdictions, a concession may be lost entirely if any purchaser has owned property before. In others, it may apply only to the eligible buyer’s share.

The relevant state revenue office publishes the current rules. The outcome can shift the upfront cash needed by thousands of dollars, so confirming it before costs are split can prevent a cash shortfall at settlement.

Exit Clauses in a Property Co-Ownership Agreement

A co-ownership agreement sets the rules between the owners for leaving, selling or defaulting. It is signed before settlement and does not bind the lender, which still holds every borrower to the full loan. The clauses that carry the most weight at exit are:

Buyout Formula

A common approach takes market value, deducts the loan balance and notional selling costs, applies the ownership share, then adjusts for any unequal repayments.

Valuation Method

An independent registered valuer usually sets the value. The clause names who appoints them and what happens if either owner disputes the figure, such as averaging two valuations.

First Refusal

The remaining owner gets the first opportunity to buy the departing share at the agreed value, within a set period, before the property is offered to the market.

Sale Triggers

Agreed events let either owner require a sale, such as a buyout not being financed within 90 days or a fixed review date five years after settlement.

Default Remedies

Where one owner misses contributions, the clause sets how the paying owner is reimbursed, whether interest applies and when a continuing default can trigger a sale.

Dispute Resolution

Owners agree to follow a set process, such as mediation, before either applies to a court or tribunal for an order to sell.

Relationship Changes

The agreement can set terms if one owner’s partner moves in, including whether board is payable. It can also set how the owners will respond if a separation leads to a family law claim over one owner’s share.

Estate Planning

Each owner commits to a will that deals with their share. The clause also sets how the survivor can buy that share from the estate, since the surviving borrower still owes the full loan. Some co-owners hold life insurance sized to the debt to fund this.

These clauses are a general guide only. What an agreement can include, and how enforceable it is, depends on state law and the owners’ circumstances.

Exit Routes and Costs for Co-Owners

A co-owner usually exits through a buyout refinance, a sale of the whole property or, where owners cannot agree, a court or tribunal order, and some routes add duty or tax. The routes and costs an exiting owner typically meets are:

Buyout Refinance

A lender will generally release a departing borrower only if the remaining owner refinances into their sole name, with the same lender or a new one, and qualifies for the full loan on their own income.

For a teacher, the whole repayment, plus any new borrowing to pay out the departing owner’s equity, is assessed against one salary. A refinance mortgage broker can model whether one income supports that loan well before the agreement’s buyout deadline. Where it does not, the remaining owner may need a new co-buyer, a larger contribution or a sale.

Property Sale

Where neither owner can buy the other out, selling is the usual exit. Proceeds first repay the loan in full and then cover selling costs. The balance is divided by the title shares and any adjustments in the co-ownership agreement, so both owners share a fall in value in proportion to their shares.

Court-Ordered Sale

When co-owners cannot agree, either owner can generally apply for an order to sell or divide the property. In Victoria, the Victorian Civil and Administrative Tribunal hears these applications under the Property Law Act 1958, including disputes over how net sale proceeds are shared. Other states use their own courts or tribunals, and the process can be slow and costly, with the decision-maker setting the outcome.

Transfer Duty

Buying out a co-owner is a purchase of an interest in land, so transfer duty is usually charged on the value of the share acquired. Whether any exemption applies depends on the state and the relationship between the owners. Relief available to separating spouses typically does not extend to siblings, friends or parents, so the duty belongs in the buyout calculation from the start.

Capital Gains Tax

A co-owner who never lived in the home, such as a parent who helped buy their child’s home, may face CGT when selling or transferring their share. Under the ATO’s main residence rules, an owner who lived in the home as their main residence for the whole ownership period is generally exempt on their share, and a partial exemption may apply where it was a main residence for only part of that period.

According to the ATO, legislated changes following the 2026–27 Federal Budget replace the 50% CGT discount with cost base indexation and a 30% minimum tax for capital gains accruing from 1 July 2027. A non-occupying co-owner planning an exit around or after that date may wish to confirm the position with a tax professional.

Plan Your Co-Buying Exit

The joint-debt risk is easier to manage before settlement than after. A practical next step is to have each co-owner’s income assessed, on its own, against the full loan before anyone signs a contract of sale. The result shows whether a buyout could work later and gives the co-ownership agreement a realistic starting point.

If you are weighing up buying with a sibling, parent or friend, the team at Education Home Loans can talk you through the options that suit your circumstances.

Frequently Asked Questions (FAQs)

1. Can my sibling and I have separate home loans on the same property?

Usually not. Lenders generally secure one loan over the whole property.

Some lenders allow the loan to be split into separate accounts, for example so each owner can make extra repayments into their own portion. Even then, both borrowers typically remain jointly and severally liable for every account.

2. Does a co-ownership agreement have to be prepared by a lawyer?

Generally, no law requires a solicitor to prepare it, but an unclear or poorly drafted agreement may be difficult to enforce.

Many co-buyers have a solicitor draft it, with each owner receiving independent legal guidance, which can make it harder to challenge later.

3. Can a parent co-buy with me if they will not live in the home?

Lenders can usually accept a non-occupying co-owner. Policies differ on whether the loan is priced as owner-occupied or investment when one borrower lives elsewhere.

4. Can we change from joint tenants to tenants in common after settlement?

In most states, a joint tenancy can be severed after settlement, which converts the owners to tenants in common in equal shares. This usually involves lodging a form with the land registry, and in some states one owner may be able to do it without the other’s consent.

Moving to unequal shares at the same time is a transfer between owners, which may attract transfer duty and may need the lender’s consent.

5. What happens to the loan if my co-owner moves out or interstate?

The loan continues unchanged, and both borrowers stay liable for the full balance.

Under the 5% Deposit Scheme, the guarantee depends on the buyers living in the property as owner-occupiers, so moving out while it is active may affect eligibility. Renting out the departing owner’s room or the home may also change the loan terms.

The co-ownership agreement usually decides how the departing owner’s contributions continue.

6. Do lenders treat co-buying with a friend differently from co-buying with a sibling?

Generally not. Lenders assess each borrower’s income, expenses, debts and credit history, not the relationship between the borrowers.

Education Home Loans can check how a particular lender views a combined application before it is lodged.

This article contains general information only and does not take into account your objectives, financial situation or needs. You may wish to speak with a qualified professional, such as a mortgage broker, solicitor or tax professional, before acting on any of it.