Image courtesy of the Financial Post
For a while, buying a home with family or friends felt like one of the most practical ways to get into Ontario’s housing market. With prices rising so quickly, pooling income, down payments, and borrowing power gave many people an opportunity they may not have had on their own.
But shared ownership is not just about getting approved for a mortgage. It is about understanding exactly what everyone is responsible for if life changes, the market shifts, or one person can no longer contribute.
A recent story highlighted the risk clearly. Three brothers and their father bought a property close to the market peak in 2021. After home prices declined, the property was reportedly about $175,000 underwater and went into power of sale. One owner had lost his job and left the country, another had moved to the United States, and the retired father was living abroad. The remaining brother, who still lived in Toronto and had employment and assets in Canada, faced the greatest risk of being pursued for the mortgage shortfall.[msn]
That is the part many buyers do not fully appreciate when entering a shared mortgage arrangement: if your name is on title and on the mortgage, the lender does not necessarily divide the responsibility based on who paid more, who lives in the home, or who originally came up with the idea.
A Mortgage Is a Serious Shared Commitment
When multiple people purchase a property together, it can be an excellent strategy. It may help buyers combine incomes, build a larger down payment, qualify for a more suitable home, or support parents, adult children, siblings, or close friends.
However, the mortgage commitment is real for every borrower involved.
If one person loses their job, moves away, gets divorced, has a baby, becomes ill, or simply decides they do not want to contribute anymore, the remaining owners may be expected to carry the payments. If the home must be sold in a weaker market and the sale proceeds are not enough to repay the mortgage, there can be a shortfall.
In the case described above, the lender’s focus was not on who was most emotionally responsible for the purchase. The concern was who remained accessible and financially able to repay the debt.[msn]
This is why I always encourage clients to look beyond the approval amount. A lender may approve a group of borrowers for a mortgage, but approval is not the same thing as a long-term plan.
Shared Ownership Can Still Work
I want to be clear: buying with family or friends is not automatically a bad idea. In many cases, it is the reason people are able to purchase a home, keep a property within the family, or create more stable housing arrangements.
The key is making sure the arrangement is built to handle real life, not just the best-case scenario.
Before moving forward, I recommend that every shared buyer discuss questions like these:
Who will live in the property, and who will be contributing financially without living there?
What percentage of the down payment is each person providing?
How will mortgage payments, property taxes, insurance, utilities, maintenance, and repairs be divided?
What happens if one borrower loses their income or cannot contribute for several months?
What happens if someone wants to move, sell their share, or be removed from the mortgage?
Can the remaining owners afford the home if one contributor stops paying?
Is there a written co-ownership agreement prepared with legal advice?
Is there an emergency fund available for repairs, vacancies, rate increases, or income interruptions?
These discussions can feel uncomfortable before closing, especially when buying with family. But having the conversation early is much easier than trying to resolve a disagreement after a missed payment or a forced sale.
A Real-World Example
Imagine two sisters in the GTA decide to buy a townhouse together because purchasing separately is out of reach. One sister plans to live in the home, while the other contributes toward the down payment and mortgage as an investment.
At the beginning, the plan works well. Both have stable jobs, the mortgage payment is manageable, and the home’s value appears to be increasing.
Then, two years later, the sister living in the home loses her job. The investor sister is suddenly covering her own rent, her personal expenses, and a larger share of the mortgage. At the same time, the market has softened, so selling the property may not produce enough money to fully repay the mortgage and closing costs.
If they had created a co-ownership agreement and a contingency plan at the start, they may have already agreed on how long one owner could miss payments, whether the other owner could buy them out, and when the property would need to be listed for sale.
That planning does not eliminate every risk. It gives everyone clarity before financial pressure turns into conflict.
Do Not Let a Pre-Approval Be the Whole Plan
A mortgage pre-approval is an important first step, but it should not be the only conversation. Shared ownership requires a closer look at affordability, legal structure, ownership percentages, future plans, and worst-case scenarios.
I believe the strongest mortgage decisions are made when buyers understand both the opportunity and the obligation. Buying with others can help make homeownership possible, but everyone involved needs to know that the mortgage responsibility can follow them even if they move out, stop contributing, or leave the country.
Before you add a family member, friend, sibling, or investor to a purchase, let’s review the structure carefully. I can help you understand the mortgage side of the arrangement, assess affordability under different scenarios, and make sure you are asking the right questions before signing.
Contact me, Kechanth Kannan at Mr. Mortgage, at +1 (647) 554-2718 or connect with me on Instagram at @_mrmortgage.
