"The benefits of having a buying partner don't just come from having deeper pockets, but also give you the chance of securing a joint mortgage, allowing you to borrow more together, so you can secure a larger and perhaps more suitable place to live"
- Ben Thompson - Mortgage Advice Bureau
Traditionally buying with a partner has meant a romantic partner, but times are changing. In fact, our research found that 52% of prospective buyers said the financial situation of the past few years has meant they have changed who they plan to buy with.
This is especially true for younger buyers, with 23% of 18-24 year olds looking at buying with a family member or friend. Financially, it can mean that you might be able to afford a more expensive property or simply help you build a bigger deposit than going it alone.
However, there are things to consider when buying with a partner to ensure that you are both mortgage-ready.
Mortgages
The benefits of having a buying partner don't just come from having deeper pockets, but also give you the chance of securing a joint mortgage, allowing you to borrow more together, so you can secure a larger and perhaps more suitable place to live.
A joint mortgage works much the same as having one solely in your own name except both you and your partner's finances and credit scores are considered.
There are drawbacks to consider when getting a joint mortgage - for example, your partner's credit score could damage yourself their own financial position deteriorates after moving in, as you are both responsible for payments, and this could prove difficult to maintain should your partner not be able to pay their fair share.
This means it is important you are confident and trust the person you are buying with as being reliable. Do speak to an expert about the decision of sharing a mortgage, to ensure you fully understand what it means and its risks.
Decide ownership
Although obtaining a mortgage when buying with a partner means you are equally responsible for the repayments, this is not always the case when it comes to ownership. A joint mortgage doesn't always mean joint ownership.
There are various types of ownership that warrant consideration when it comes to taking the leap to buy a home together:
Joint Tenancy: each tenant has equal rights to the property. It doesn’t matter who paid more towards the property, you are viewed as a single entity.
Tenancy in common: This kind of tenancy allows each tenant to hold a different share of the property. For example, if you provide 40% of the house deposit and pay 40% of the mortgage, your share will be 40% of the house price, whether it goes up or down in value.
Joint borrower sole proprietor
It is important to consider what type of ownership is best for you and speaking with a mortgage advisor should help in deciding what is the best option and will help you to get mortgage ready, taking into full consideration your future plans and priorities, as well as your current affordability.
Buyout agreement
Although buying a home with a partner is exciting, it is essential that you protect your own interests. Whilst married couples have certain rights when it comes to their shared home, this is not the case for unmarried couples.
One way you can protect your rights is by getting a cohabitation agreement. The agreement plans how you and your buying partner organise your finances and property while living together and what the protocol will be in the case of splitting up, becoming ill or passing away.
This agreement can be arranged by a family solicitor and can also be utilised by friends or family who are moving in together. Whilst the agreement may seem pessimistic, one must not overlook the importance of protecting your respective interests and futures.
