Buying property with your partner is a big step in the relationship. It’s more momentous than taking care of a furry friend or moving in together and will probably cost you more than saying ‘I do’. But it’s not all whispering sweet nothings and long prosperous futures – there’s a lot that can go wrong when investing in property together.
What if the relationship breaks up or one partner loses his or her job and can’t continue to pay the mortgage? There’s so many moving parts at play and logistical considerations when joint-purchasing property that it’s easy for things to go a little astray.
To make sure your collaborative home buying experience with your special someone doesn’t cause strife, we’ve whipped up a quick guide to the essentials.
Deciding between tenants in common and joint tenants is perhaps one of the most important early decisions when buying property with another. This will determine how you own the property and who owns what. Becoming joint tenants will mean that you both effectively own the property – almost as if you’re one legal entity for the purpose of ownership. According to an information sheet from Walker Kissane and Plummer Solicitors (WKP) this means the following:
Understandably this type of ownership is only advisable if you and your partner are married or absolutely certain that you’re in for the long haul. In the event of a break up it can be difficult to split the asset as you both effectively own the entire property together.
With tenants in common you and your partner will split ownership of the home and be separately responsible for your portion. WKP state that this means the following:
This ownership agreement is ideal for newer relationships as in the unlikely event of a breakup it’s easier to split the asset. It also may be useful for those who wish to unevenly split an asset – in the case that one owner earns more or has extra help from their family.
Under most mortgage agreements you will be totally responsible for your partner’s share of payments if he or she can’t or wont pay. For fledgling couples this could prove a little worrisome, particularly if your partner has outrageous spending habits.
Get advice form a lawyer or mortgage broker in regards to limiting your liability for your partner’s side of the mortgage. You may be able to finance it separately as tenants in common and avoid issues of joint liability.
When you’ve made all the basic decisions a co-ownership agreement is a great way to make it all official. This will cover all the basics from who pays the bills, to who can live in the house and how an owner sells his or her share in the event of a breakup.
Such an agreement may seem unnecessary given the trust that most partners have for each other. However, the transparency and clarity that it provides will make the entire process easier and more stress free.