Info & Advice

Do your research before buying a house with a boyfriend or girlfriend

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The most expensive item most people will ever buy is their home. Doing so with a significant other is a great way to lighten the load and share the burden of all those mortgage repayments. But it is important to be fully prepared before doing so.

A few decades ago, few people ever considered buying a house with anyone other than a spouse. But those days are gone. Cohabitation is the fastest-growing family type in the UK: living together for years before formally tying the knot has long lost any whiff of scandal and been the norm for decades now.

In some respects, a partner’s willingness to purchase property with you before marriage is a good sign. It’s a sign of commitment: they can’t just walk out of the relationship on a whim with all those payments to be made. But buying a property with your boyfriend or girlfriend also comes with question marks and uncertainties attached, and it is sensible to prepare for these well in advance of signing on the dotted line.

Questions to ask

Here are some of the most important matters to discuss with your partner before you begin your journey into property ownership. Be prepared for some stress and frustration alongside the satisfaction of quietly building value.

Will the property be held in both your names or only one party’s?

We would not recommend sole ownership in most cases because this can make interest in a property harder to demonstrate if the relationship ends. But in some circumstances, it may be the right choice.

There are two ways to hold property jointly: via a tenancy in common or by a joint tenancy. The names are relatively self-explanatory. In the former, each tenant in common shares ownership of a particular property, but their interests are distinct – different percentages for example. Their share is their own property and they may eventually choose to sell it on – perhaps to their ex – just like any other piece of property. In the event of their untimely death, their interest in the house will become part of their estate, for inheritance by their legal heirs.

By contrast, joint tenancy is simply dual ownership, with each party holding a completely equal interest. If one joint tenant passes away, their share will automatically pass to the surviving party, provided they have the legal right to inherit (as married partners do), or a clear intention for a surviving partner to inherit can be established (via a will or cohabitation agreement, for example).

Will each party make an equal financial contribution?

Will you and your partner be making an equal contribution to the down payment, the monthly mortgage bills and any renovation and maintenance costs? Who will be covering the insurance premiums and tax liabilities? This may not be a straightforward question if, for example, one party earns less than the other or loses their job a little way in. Work out who will pay what in different circumstances before making any commitments, because financial contributions made can and do affect entitlement to sale proceeds.

What will happen if you break up?

It may not be an especially romantic or inviting train of thought, but it is important to consider in detail what might happen if you break up.

if you’ve bought property, ending a relationship can no longer be a casual affair: there is too much to consider and untangle. Talk to your partner and write down exactly what would happen in different circumstances. In particular it is important to establish:

  • Will the person who moves out have to continue contributing to the they previously did, before the property is sold?
  • Is selling the property the only acceptable outcome or could one partner buy out the other? And if one party can be bought out, will they need to take out a new mortgage in their own name?
  • How long could the party who moves out maintain a financial interest in the property if it remains unsold?
  • If and when the house is eventually sold, how will the two former tenants divide the proceeds of the sale? For obvious reasons, 50: 50 is normal but this does not automatically apply in all circumstances.

Full financial disclosure

For most people, the sine qua non of a property purchase is the mortgage application. Without that nothing can happen. Because unmarried couples maintain independent financial identities, you will want to ensure there are no unwelcome surprises or aggravating delays during this process. So before signing any forms or making any financial agreements, each party should fully disclose their financial and credit history, and declare all their assets.

Each party’s credit score will be compiled or updated based on these declarations. If one partner’s score is significantly lower than the other, your bank may offer less favourable mortgage terms and that could mean the entire purchase will no longer be practical.

Seek legal advice

Applying for a mortgage and buying a house is not something to be undertaken lightly, especially if you no official legal ties to your partner. No one wants unpleasant surprises or self-inflicted snafus. Avoid such headaches by seeking legal advice before the whole process begins. An experienced lawyer will help you protect your interests and prepare for any problems that may arise. You may be in love and looking forward to a bright future, but take off those rose-tinted spectacles for a little while and make sure you cross all the Ts and dot all the Is of a major financial commitment that could affect your life for years to come.

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