Buying your first home is probably the biggest investment you will ever make with your partner. It's a huge financial decision that requires a lot of research, commitment, planning, and budgeting.
While there are advantages, there are still some things you should do before making this big financial commitment, such as:
Know how much you will share ownership
Mortgage repayments , stamp duty, insurance, repairs and maintenance are some of the costs you and your partner will split. Understand how much money each of you will share. There are two options available for buying from a property:
- Joint tenants with the right of survivorship. This is the same as the entire property. A joint tenancy can be broken when one of the tenants passes away, this is called the "law of survivorship". Hence, the ownership of the property will automatically be given to the surviving one.
- Tenants in common. This means both of you own and share of the property. Shares can be of unequal sizes, but owners have the right to occupy and use the entire property. The ownership can be passed to the chosen beneficiary of the owner.
Know each other's credit history
You need to be financially honest with each other. Even if you are applying for a home loan together, lenders see you as individuals not as a single unit. By knowing each other's credit history you can improve your possibilities of getting a mortgage approval.
Get a joint mortgage
When you buy a home mortgage with your partner you can get a mortgage. You will be accountable for making the mortgage repayments. You and your partner can decide how you will share the equity in the property. But keep in mind that your credit scores will be linked to each other and future lenders will be able to see.
Compare home loans
This is the best strategy for getting the best home loan for you and your partner. Compare interest rates, fees and features for different home loans. Get the type of home loan that will fit your current financial situation.
Put it in writing
Your situation with your partner can change in the future. It's best to contact a lawyer to get you a written agreement that clearly indicates the complete details of you and your partner's agreement, such as property ownership, the equity in the property partner, how to split the income and costs, the mortgage repayments. and many more.
Signs your are ready to buy a home with your partner
Both of you are financially capable
Discussing money can be awkward but this is crucial when buying a house together. Both of you need to be confident that you’re financially capable of taking on a mortgage. This is a long-term investment that could last 30 years.
Have you considered the additional costs aside from the mortgage repayments such as legal fees, stamp duty, lender’s mortgage insurance, building and pest inspections, and moving costs? Factoring in all the estimated costs is important so you know how you will split all the bills and payments.
You have a pre-approved home loan
It's a waste of time to go house hunting without getting a home loan pre-approved by a lender. This will tell you what you can afford to spend.
You agree on ownership structure
Buying a house or investment property alone is different from buying with someone. You need to think about what kind of ownership you want. Will you be joint tenants or tenants in common? This is important so you know what will happen to the property if one partner dies or the relationship ends.
Both of you have stable jobs
Changing jobs can greatly impact you financially. If one of you lost their job or made a major career change, the other one would be responsible for all the payments including the mortgage and the household expenses. So it’s safer to avoid buying a house until both of you are happy and stable with your careers.
You’re very compatible with each other
Will this be the first time you’re living together in one house? Sharing one space can put unexpected strain on the relationship. Keep in mind that investing in a property is a much bigger responsibility than renting an apartment together.
You agree on what you want
It will be a challenge if your partner wants to live in the city, but you prefer to move to the suburbs. The two of you need to agree on what you want in a property including the location, amenities, the number of bedroom and bathrooms, the design and the layout of the home. You will need to talk it over and agree.
Final thoughts on buying a house with a partner
Buying a home with your partner can truly bring you closer together. You have researched home loans together, put together the right documents, and each of you know each other's rights and responsibilities.