Moving in with your partner can be a wonderful moment. If you have been in a relationship for a long time, you may have been preparing for this to happen for several years. That’s why it’s so important that you are well-informed about it and handle every part correctly.
There are plenty of financial advantages to buying property with a partner – but this comes with a few hurdles to jump over, too. If you want a clear summary of the process involved, areas for you to consider, and more, then you’re in the perfect place.
Keep reading our blog below for all the details you need.
What is a Joint Mortgage?
A Joint Mortgage is when two people get a mortgage together and are therefore jointly responsible for the monthly repayments. When you apply for this type of mortgage, both people’s salary, credit score, and savings will be considered when the bank decides how much to lend you.
You can usually get a Joint Mortgage for anywhere between two and four people. These individuals do not need to be married or in a relationship – you can be friends or family, too.
There are two main ways that a Joint Mortgage can be structured: either as a Joint Tenancy or as Tenants in Common. We have gone into further detail on what these phrases mean further below in the blog.
Things to consider when buying property with a partner
You should consider it carefully before purchasing a property with a partner. The nature of your relationship, your long-term aspirations, and the amount of money in your pocket will all affect the best route forward. Here are a few questions you should think about before jumping in:
Do you intend to live with them forever?
This factor will impact the type of Joint Mortgage you get (see more details in the section below).
Will you equally contribute to mortgage repayments, or will it be structured another way?
Not all partners choose to equally contribute towards mortgage repayments. For example, if one of you contributed significantly more to the deposit, then you may agree for the other person to pay off more of the mortgage. Likewise, some couples like to have their own ‘departments’ – such as one person paying all bills (electricity, water, gas, maintenance) and the other handling mortgage repayments.
What happens if you separate?
Although this is not a pleasant thought, you should have some contingency plan if things don’t work out. You will hopefully both want things to be fair and equal, which is why some couples choose to put something in writing. Alternatively, you may reach a verbal agreement, although this is unlikely legally binding.
Should we get a Deed of Trust?
This piece of documentation can be essential to making things financially fair between you and your partner. We will go into further detail on this later in the blog.
How much can we afford?
Like with any property transaction, this is arguably the most important question. Sitting down to calculate your shared resources will enable you to decide what size mortgage you can reasonably afford. This will impact the size of the property you opt for, as well as the location you are able to move into.
What sort of house will suit us both?
When you attend property viewings with your estate agent, you need to think about not only your desires but also the wishes of your partner. Have a conversation about your ideal situation based on your budget because it is important that you are both happy.
Joint Tenancy vs Tenancy in Common
Under a Joint Tenancy, all the borrowers have an equal right to the home. This means that if one person dies, the survivors inherit the remainder equally, and it also means that all the profits are split evenly when the time arrives to sell.
By contrast, a Tenancy in Common means that each person owns shares in the property, which can be divided up however you like. This means that not all people will necessarily own the same amount – and therefore, if the house is sold, a different amount will go to each person. Shares can be sold and can also be inherited by other people if you die.
The method that suits you best will depend on your circumstances. As a general rule, a Joint Tenancy is more common between married partners who want there to be equal in the relationship. Meanwhile, you tend to see a Tenancy in Common between friends/family members who have contributed varying amounts to the business and who don’t plan to live together forever.
You should get independent legal advice if you are weighing up your options, as there are lots of factors to consider.
Considering a Deed of Trust
A ‘Deed of Trust’ is a document that details how a property is divided between its owners. This is particularly useful if different people own varying amounts, such as under a ‘Tenants in Common’ agreement.
The document outlines how much each person owns and what happens financially if/when the property is sold. If you wish, this Deed of Trust can be amended to incorporate changing circumstances.
Some partners choose to get this document when they move in together – especially if one person has contributed significantly more to the deposit/repayments. The Deed can outline a clear path to making things equitable between the couples, such as one person paying more of the mortgage repayments until the equity split eventually becomes 50/50.
You should speak to a legal expert who can provide guidance in this area and outline the advantages and drawbacks of getting a Deed of Trust created.
Is it more affordable to buy property with a partner?
When you take out a Joint Mortgage, the bank usually increases the amount they allow you to borrow. This is because your combined salaries are higher than it would be if there was just one of you. Similarly, if you both have some savings, then these totals combined will create a larger deposit.
Since you are able to borrow more money, you can get a larger mortgage and, therefore, afford to buy a larger house. Generally speaking, this is because lenders consider you a ‘safer bet’ if there are two incomes to cover the monthly repayments rather than just one.
For more guidance on property transactions, read our blog on “Are House Prices Dropping?”.
Can I buy a property with a partner even if we’re not married?
Yes, you can buy a property with anyone, even if you’re not married. In this instance, a ‘Tenants in Common’ agreement tends to be more suitable because you are unlikely to live together forever. This route can enable you both to retain the equity you put into the house and ensure everyone is treated fairly.
Do our mortgage repayments have to be the same on a joint mortgage?
No. A Joint Mortgage can be repaid by one person only, or there can be varying contributions to the repayments. A solicitor can help you organise this and write it down.