Forget raising a puppy, travelling or keeping your favourite pot plant alive – buying property is the ultimate step forward in your relationship. It’s a massive stride towards a brighter and more secure financial future together, but it isn’t a guaranteed success.
If you don’t know what you’re doing, and you don’t agree on the essentials before you purchase, disagreements and relationship problems could result in some awkwardness when it comes to mortgage repayments. We’ve whipped up a quick list of important considerations when buying property and taking out a home loan together, to make sure your mortgage doesn’t come between you.
Structuring your ownership
There are two options to consider when it comes to structuring ownership of your new property: tenants in common, or joint tenants.
Tenants in common means that you both separately own an agreed upon percentage of the property. Under this agreement you’ll split mortgage repayments, expenses and any income from the property according to the amount you each own (usually 50/50 but it doesn’t have to be).
Being joint tenants, on the other hand, means that you own the home as one entity. You’re both equally responsible for the property’s income and expenses and if one partner passes, the other automatically receives full ownership. On the other hand, if one skips out on their mortgage repayments the lender will almost certainly hold the other one fully accountable to pay their half.
Put it on paper
When you’ve decided how your ownership is going to look, it’s time to make it official and put it on paper. A conveyancer can help you draw up this document, which will be legally binding and help to set clear boundaries going forward. It should include the following at least:
• Details of how the property will be owned.
• An agreement about who is responsible for which costs.
• A plan for the event that one partner is unable to make payments.
• A separate plan for what happens if one party wants to sell the property.
Limit your liability
It may seem overly legalistic to cover yourself in the event that your partner can’t keep up their side of the bargain. But it’s always better to be safe than sorry.
Talk to a conveyancer about how you can limit your liability. You may be able to take out separate mortgages as tenants in common, so that if your partner can’t make their repayments, the bank can’t come after you.
When you and your special someone are ready to take the plunge and buy together, get in touch with us. We can help make sure that your home loan is perfectly suited, just like you and your partner