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Things you should know when you plan on buying a house as a couple

Things you should know when you plan on buying a house as a couple

So you’ve just found the perfect home for you and your partner. Congratulations! Homeownership is a wonderful adventure you and your better half will enjoy for years. But don’t forget all the details that come along with home ownership.

Before you start the home buying checklist or plan the “We did it!” Instagram photo, make sure you have all the important—and maybe difficult—conversations with your partner first.

Whether you are married or living common law, here are things that any couple that wants to get the most out of their new life as owners should know.

Why You’re Buying a Home

You need to think critically and deeply about your motivations for buying a house. Is it because you’re old enough? Or all your friends are becoming homeowners? Be honest with your partner and yourself about your reasons.

Not only do you need to identify your own reasons, but you also need to see a clearer picture of your partner’s perspective.

What You Want in a Home

We all know what to think about: location, size, amenities, age of the property, and price. But be prepared for a heated discussion since it’s unlikely you and your number one will agree on every little detail. The purpose here is to see if you can find a way to meet in the middle without losing your temper.

By discussing these types of details and deal-breakers, you can pinpoint whether are aligned enough or not on what you ultimately looking for in a house to purchase.

Calculate How Much You Can Afford

The first step in your home search is to figure out how much you can afford. Coming to a decision on how much you both can afford to spend on a house is very crucial in making sure you both stay within your means to avoid future problems that could lead to big consequences financially and relationship-wise.

Setting up a meeting with a mortgage advisor might be the best idea. They will work out how much you can afford and support you with choosing the best option for you. You can also do a calculation with an affordability calculator like the Money Saving Expert tool, which can help you figure out how much home you can afford and also show how much you’ll end up spending based on a variety of factors, such as the size of your down payment, the interest rate you’re offered and the other kinds of debt you have.

Be transparent with finances

Financial transparency is very important – especially if you are embarking on purchasing the biggest investment of your life, a home, together.

It’s important to know what salary your partner is on so you can support one another, and also be aware of any debts and savings. If you can, try to pay off any debts you and your partners have before applying for a mortgage – some debt isn’t necessarily a deal breaker when it comes to applying for a mortgage, so you don’t have to worry about being 100% debt-free before you start looking for a mortgage lender, but the less debt you have, the more likely you are to find a lender who offers you a competitive rate.

Mortgage lenders will look at all that information, which is why it’s important to be transparent. This will help to manage both of your expectations when borrowing. 

If you’re not married, should you buy as joint tenants or tenants in common?

When buying a property as an unmarried couple, you can own a house with another person in two ways – joint tenancy and tenants in common.

What is the difference between joint tenancy and tenants in common?

  • As joint tenants, you will both own the property equally – there are no separate, identifiable shares. If one person were to die, the surviving owner would automatically receive the other’s ownership of the property. Joint tenancy is a popular choice for couples, as it can mean a little less complexity and fewer legal documents.
  • As tenants in common, you each own separate identifiable shares in the property. These may be equal or unequal shares depending on what you decide. Under this form of ownership, if one person were to die, their share in the property would pass to whoever they have chosen to inherit it in their will.

What percentage of the property will you own?

When you buy a property together, your individual shares of the ownership will usually be 50:50, irrespective of how much each of you puts towards the cost of buying the property.

If you wish to have a different arrangement e.g. because one of you is contributing significantly more than the other, you will need to have your percentages of ownership specified in a legally binding document.

Mortgage and other bills

If one of you will be contributing more than the other towards mortgage payments and other bills, you may also wish to have this considered if you ever come to sell the house.

It may be a good idea to agree in advance exactly what percentage each of you will be contributing to ongoing costs, such as the mortgage payments, and whether this difference will be reflected in how much each of you will get if the property is sold.

If you are not sure how much each of you will contribute, you could have an agreement drawn up that specifies what percentage of the property each of you will own at the point of sale will be based on how much each of you has contributed up to that point.

What will happen if you split up?

While it may not be something you want to think about, it is worth having a plan in place for what happens to the property if you separate.

Although not required by law, any tenants in common should draw up a Declaration of Trust as it makes the ownership shares much more transparent and easier to prove in years to come.

A Declaration of Trust is a legal document that outlines the financial intentions and decisions both parties made at the time of purchasing the property. It’s a good way of making both of your financial situations transparent from the beginning, and in the event of a divorce, the document states how the property will be split as well as legal fees. 

Ensure your partner inherits the house in case of death

Make sure you know where your fire exits are – just in case you have an emergency during the festive period. Of course, you don’t want to think about it, but you should also consider what should happen to the property if one of you was to die if you’re unmarried. Because on the death of a partner of an unmarried couple, there is no automatic right for the partner to inherit, you should ensure you write a will, and it is completely up to date and reflects your wishes. Make sure you know where your fire exits are – just in case you have an emergency during the festive period.

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