Buying a home with your partner or friends can be a much needed boost to get on the property ladder – helping to raise a bigger deposit and making your dream that extra bit more affordable.
Checking your Experian Credit Report can also help you see if and how you are financially linked. It can also help you understand if you need a little work to tidy up your credit history before a joint mortgage application is made. Here are some key tips we’ve put together to help you, if that’s what you’re about to do.
Unfortunately the law is lagging behind modern life, which can leave unmarried couples on tricky ground if the relationship doesn’t work out or one of you wants to sell further down the line.
Thankfully, there’s no shortage of ways that you can protect yourself financially. While filling in forms and going over legal paperwork doesn’t scream romance, it does provide protection as you embark on this new journey together.
So what should you take into account?
First of all, you should agree on the type of ownership. According to the website advicenow.org.uk, there are three things that don’t exist: the Loch Ness monster, a cat’s nine lives and common law marriages. Living with your partner doesn’t guarantee you a fair share – you’ll have to work out how to divide the property, money and belongings between you, often when you’re feeling angry or not particularly charitable.
You have two options – a joint tenancy, where you’ll have equal rights to the whole property, or being tenants in common, where you can own different shares of the property. Each has its own benefits and caveats, so it’s important to be open with one another about how you want to share the home. In a joint tenancy, the property automatically passes to the other owner in the event of your death. However, if you’re unmarried tenants in common, then your share would go to your next of kin – meaning your partner might have to leave your home.
To avoid any problems down the line, it’s also wise to draw up a living together (or cohabitation) agreement. This records what each person will contribute to the household, so if one person pays the utility bills while another repays the mortgage then this can be recorded for posterity.
If the worst comes to the worst, then a court will usually uphold the agreement – provided that it offers a fair and honest accounting of what each of you contributed. For a free living together agreement pack, advicenow.org.uk offer a full guide and template on what to include when drawing up the document. For absolute peace of mind, homeowners can have the agreement drawn up by a solicitor and independently witnessed to ensure that the document is legally binding.