The Ultimate Guide to Buying a House With Your Partner
Moving in with a partner and purchasing your first home together is a huge, exciting step in your relationship. As new home experts, we want to provide you with all the necessary (slightly boring) steps to ensure you’re ready as a couple for the move.
As the rate of cohabiting is increasing, perhaps due to the great benefits of splitting costs, it is important to be prepared for what’s ahead. Within this blog, we’ll look at the financial and legal considerations to make before you move into your new home.
Enjoy the house-hunting process
Before we move on to the serious stuff, buying a house together is a major step and is a testament to your trust and relationship. It’s an important time to talk about each other’s goals, explore different neighbourhoods, and imagine your life together.
Take this opportunity to get to know what kind of life your partner envisions you having. What does a home mean to them, what would they want their house to feel like; comfortable, stylish? Let yourself get caught in the moment and keep a light-hearted approach to the journey overall, as I’m sure you know or have heard that house hunting can be stressful at times, so remember that you’re not alone and that you will eventually land on your feet.
With that in mind, here are some of the more practical considerations to make around buying a house with your partner.
Who is paying for what?
The main thing to consider when buying a house with a partner is finances. As well as saving for a deposit, you’ll need to have a frank conversation about how to tackle monthly mortgage payments, bills, food, and more when you’re living in your property. For example, if one of you earns more than the other, will they pay more of the mortgage each month?
Ensuring you’re on the same page about finances will benefit your relationship and potentially prevent arguments in the long run.
What kind of property can you afford?
Whilst having conversations about who is paying for what, it is important to be realistic about how much money can be put aside for paying for the house each month so that you can stick to a budget whilst still enjoying your new lifestyle. Only choose a mortgage that is comfortable for you to pay back monthly.
Don’t forget to factor job security and the level of disposable income you’re likely to need each month into the equation so you can make a realistic assessment of what mortgage rates you can afford.
How do joint mortgages work?
A joint mortgage means that you can pool your money and combine your savings to pay for a deposit and consequent monthly mortgage repayments together. Since lenders will look at your combined income, you’ll likely be able to borrow more than if you bought by yourself.
How to protect yourself when buying a house with a partner
If you’re both contributing to the deposit or mortgage payments but not paying equal amounts, looking at the legal implications if you do separate is an essential step before buying a home. Although it is difficult to have these conversations seeing as you’ll ideally want to be together forever, it shows you care about each other to create a plan if it does happen.
According to research by Zoopla, couples in Britain do not protect themselves in case of a breakup, with 27% of people claiming they lost out on money when proceeds from a property sale were not split fairly. Within the research, they found that only 15% of people took out a declaration of trust or cohabitation agreement which would’ve protected them against this problem. Legal agreements can strengthen trust and transparency, preventing future disagreements and fostering open communication
Declaration of trust
A Declaration (or Deed) of Trust is a legally binding document that lays out how much each person has contributed to the deposit, how much they will contribute to the mortgage payments, and ultimately how much of the property they own. By doing this, it can also be determined what percentage of money each party will receive if the property is sold.
As a legal document, the Declaration of Trust must meet certain criteria which is why it’s best to have a solicitor draw up the deed.
A cohabitation agreement is a document that focuses more on an unmarried couple’s assets that would be under discussion if you parted ways. In the case of separation, it lays out who owns what assets, who is responsible for bills, how savings will be distributed, what will happen to children or pets, and more.
Decide which type of joint ownership
There are two different types of joint ownership in the UK – joint tenants or tenants in common. Depending on which option you choose will influence what will happen to the property if you break up or if one owner passes away.
Joint tenants have an equal right to the whole property, independent of whether one person paid more than the other. This means if the property is sold, you will each own a 50% share of it. You can’t pass ownership of the property in your will as the house will automatically go to the other owner.
Tenants in common
This type of joint ownership means you can own different shares in the property. If one person paid for the deposit, for example, they may want this recognised legally. This option also means you can alter the percentages over time, for example, if one partner begins to contribute more you might share the ownership from a 20%-80% split to 40%-60%.
Different to joint tenants, with tenants in common if one owner dies the property can be passed on in your will. This is commonly chosen for couples who are in their second marriage but have children from a previous relationship, where they’d like to leave the house to their children.
Learn more about home-buying
Buying a house marks a beautiful step towards your shared future and we hope you’ll live a long and happy life together. For more advice on the house-buying process, check out our helpful blogs from County Town Homes. We take you through the process, from deciding where to live to a Moving House Checklist for when you’re ready to take the leap.