Co-Owner Financing

If you are considering financing property with others, the lender will require each owner to sign the original mortgage. The lender holds each member personally liable for the mortgage, regardless of his/her individual level of investment in the property.

For example, say your contribution to the down payment represented 10% of the building price. You are now expected to pay 10% of the mortgage each month. Despite your agreement with the other co-owners to pay 10%, the lender will, in most cases, still want a 100% guarantee on the loan. If the mortgage goes into default, the lender will come after you personally to pay all or a portion of the loan. Typically, the lender will require some type of guarantee from all co-owners.

The lender will look for as much security (or more) as in a single-owner purchase. In addition, your individual credit records will impact the financing package, even if you are purchasing the property as a business entity or nonprofit. See Chapter 3: Understanding Credit for more information on credit's role in the financing process.