Buying Your First Home with Your Partner: What to Consider

Decorating your home for summer

Many couples aren’t ready to get married but are ready to buy their first home. While buying a property with your partner is an exciting step, it also requires time and consideration. After all, once you commit to buying a home with your partner, you could end up with nothing in the event of a break-up if you fail to put legal protections in place.

In this article, we will be discussing what you need to consider when buying your first home with your partner. 

1.Put All Your Cards on the Table 

If you are considering buying a property with your partner, it’s important both of you put all your cards on the table. In other words, it’s time to be completely honest. While honesty is, and should be, the cornerstone of any healthy relationship, many couples are shy about discussing their finances and tend to brush over this topic. 

However, when you are committing to buying a property with your partner, it is vital both of you are open and honest about the state of your finances. Not only will this help strengthen your relationship, it will also help when seeking advice from a mortgage advisor or when requesting a loan from the bank.  

2.Consider the Financial Implications 

If you are considering buying a property with your partner, it’s likely you have given some thought to the financial implications of this commitment. Whether it’s how much you need to set aside in savings or working out your mortgage repayments, considering finances is important. 

However, what many people do not consider when buying a house together, is how much their partner’s finances can influence their own. In other words, if your partner has a poor credit rating, it is worth considering whether making a joint financial commitment is wise. In situations like these, one person’s poor credit rating could significantly influence the mortgage price – making the purchase more expensive than it otherwise would be. 

According to Andrew and Andrew Solicitors, “Buying or selling your home is not only one of the biggest financial commitments you are ever likely to make, but also one of life’s more stressful experiences.” Before launching into such a big commitment, it is always recommended for couples to consider the financial implications of such a big decision. Doing so could avoid a lot of stress and financial difficulty in the future. 

3.Create a Declaration of Trust 

If you haven’t heard of a declaration of trust before, it’s a legally binding document that outlines the financial agreement between two people when they purchase a property. While you might be completely in love and not feel the need for a declaration of trust, having one in place will ensure you are protected if you and your partner happen to break up in the future.

According to Help and Advice, “Buying property is very expensive so you want certainty around the investment you are making. Also, you can avoid disputes with the person you are buying with in the future, because you already have a plan in place for if one person wants to sell their share or the property is sold.”     

A declaration of trust document can have information on things such as how much money has been invested by each person, how sale proceeds should be divided in the event of a split, and the percentage of the property each person owns. 

Having details like these outlined in a professional manner can go a long way towards ensuring the whole process is easier and more transparent. What’s more, a declaration of trust can make it easier to prove property ownership in the event of a messy split.   

4.Discuss Ownership Division 

It’s important to discuss how you expect property ownership to be divided. This is much more important than making decisions about which new couch to buy and whether your home could fit a dining table. We all approach money differently and so discussing the division of property ownership with your partner should be a priority. Let’s take a look at the two most popular division options. 

Joint Ownership: the definition of joint ownership is pretty self-explanatory; you both own 50% of the property, regardless of the deposit size you each brought to the table. Joint ownership is a popular option for many couples as it tends to keep things simple – particularly in a scenario where you separate.  

Tenants in Common: some people consider that a Tenants in Common agreement is a lot fairer. Tenants in Common takes into consideration the deposit amount both you and your partner contributed towards the purchase of the property and splits the ownership accordingly. This can be a helpful way to do things as it ensures you each own a fair amount of the property. 

If you’re not sure what type of ownership division would work best for you and your partner, you might consider talking to a lawyer or financial planner who can help you make the best decision for your circumstance. 

5.Write Up a Property Agreement 

Often, it can be helpful to put your thoughts and expectations into writing. Taking the time to write out a property agreement can be a fantastic way to secure your expectations as a couple before jumping into purchasing a property together. 

Otherwise known as a “cohabitation property agreement”, a property agreement lets you write out rules and expectations for how your property should be divided in the event your relationship doesn’t last. A property agreement should include information such as: 

  • The percentage of property each individual owns 
  • The buyout agreement 
  • Who is responsible for payments if one party doesn’t fulfill their obligations 
  • The type of property ownership 
  • The dispute process 
  • An exit strategy, should the worst happen. 

Writing your expectations down is one of the best ways to approach joint property ownership with your partner – especially when you aren’t married. 

Final Words 

Buying your first home with your partner is a very exciting time – as it should be! And while you don’t want to prepare for the worst case scenario, it’s important to consider the points above so that you can enter such a significant financial decision with wisdom.