“Will you buy a house with me?”
That’s not your typical pick-up line, but seriously, this is a common marriage proposal by young Singaporean men to the love of their lives.
The positive answer to this question is “I do” and then to wake up early the next day, first, to make a trip to the Registrar of Marriage, and then to the Housing Development Board for a chance to own a dream house to start a family to fulfil the simple prophecy of life.
As we march towards developed nation status as a country, owning a house is increasingly difficult. House prices are disproportionate to the income that we are earning. A feature of any developed economy in terms of housing is either to rent or government-subsidised housing for the middle-income masses. Private housing ownership is either for the affluent or through inheritance.
Therefore, one should seriously consider a final push for home ownership in this last lap to First World status. The affordable housing policy pushed forward by the Government of the day cannot be a better endorsement of this hard truth.
On the other hand, it is also well-documented that the home loan rejection rate is also getting higher and higher everyday, with constant policy updates and regulations by the central bank for prudent lending. While we patronise the frequently held property exhibitions over the weekend at popular destinations in search of our dream home, we will ultimately be disappointed by the lack of bank loans to finance the purchase and not for the lack of choice property.
This is where we need to seriously look at the merit behind the Singaporean marriage proposal.
The fact is, buying a house or even property investment is now beyond the single-income family, for most of us.
We can no longer hunt like tigers, but rather be like lions, which hunt in packs.
Leverage is not just through the banks but also extends to co-investors. It is no surprise to observe that there is now an increasing number of loan applications with multiple borrowers.
Other than married couples, there is also a common leverage with couples in serious relationships who can increase their success in a loan application with two strong incomes instead of a single-income applicant. Similar leverage could also work for fresh working adults to buy a house with their parents. Parents can provide the initial deposit and a track record of a stable income while the young child can stretch the loan repayment period to as long as 35 years for his/her tender age.
It’s a win-win situation for all in ensuring private ownership of property.
Legally, one has learned the difference between a borrower and a purchaser as well as the intricacies in buying property jointly. A purchaser need not be a borrower and vise versa.
The technical terminology to tell the banker is third-party security in instances where the borrower is different from the purchaser. It is the credibility of the borrowers that will be scrutinised by the banks. The borrowers have the obligation to pay back the loan, while the purchasers are to provide the security in the event of a loan default.
Decision-making on the property is also a key factor when you decide to purchase a property with multiple owners. If you are buying in your individual name, please be aware that decision-making is one of full consensus and not majority rules.
No transaction can take place with one party saying no, no matter how small his/her share is. You, of course, have the choice to buy under a Sdn Bhd or a limited liability partnership (LLP) that provides for majority rules. The margin of financing is lower when purchased under these entities.
To circumvent any potential disputes in any unforeseen circumstances like breaking up and divorce, one can certainly enter into some form of contract to regulate these eventualities.
This may not be the norm, just common sense. There are instruments like options, trust and power of attorney that can be added in order to reflect and execute the intention of the parties.
As we embrace the new sharing economy, we cannot help but to accept that home ownership is now part of this reality. Learning how to share with another person is now more important than learning how to own a house. Communication is the key to unlock the real values in this sharing economy.