A new property and a new life together...
Owning a home represents the good life for many British couples. On the upside - It is often impossible for single people to get on the property ladder now. You need at least two incomes even to consider it.
- Monthly mortgage payments are invested in your property rather than your landlord’s, building your nest egg instead of theirs.
- The value of your home is likely to grow each year (although nothing is certain).
- You can brag to friends, and invite as many to stay as you like, for as long as you want.
However - Most people have no idea what they’re going to be doing for the next 20 years, so committing to paying £1000s each month is risky.
- If it does all go horribly wrong, you risk years of savings and mortgage payments in a messy split.
If you buy a house or flat, or move into your partner’s place and start contributing to the mortgage or the bills - or for that matter re-decorating or buying furniture; you need to protect your interests. You should - Agree in advance what you can each afford to pay. This may be a certain percentage of each partner’s income.
- Split the mortgage/bills and unexpected costs. The easiest way to do this is set up an automatic payment to a joint account straight after your pay is deposited to whip the money away before you have a chance to get your hands on it.
- Both get independent legal advice. This could include, for example, whether a co-habitation agreement is a good idea in your case.
- Live within your means. Mortgage payments should be manageable and come before all other spending.
- Make sure your mortgage remains competitive. You wouldn’t wear the same flares you wore 20 years ago, so why be stuck in the same daggy mortgage? Learn more about re-mortgaging here.
If you decide to co-own your home then you need to think about how you want to divide it up in legal terms. There are two ways of doing it: either jointly or on the basis of ‘tenants in common’.
Joint owners
Joint ownership is the most common option. If you are married you are automatically joint owners. It’s where you both own the house between you and there’s no technical division of the property.
- If one of you dies, the surviving partner automatically owns the house, regardless of whether a will has been drawn up.
- This means you can’t ‘gift’ your share of the property to anyone else. Because lots of people don't bother to make wills, this at least covers the problem of dying intestate (without a will) since there will be no arguments about who subsequently owns the whole house.
- If you split up, though, it’s worth bearing in mind that you might end up feeling short-changed if you have put more money into the house than your partner.
- You might have each paid half of the deposit and then split everything from the mortgage payments down to the decorating bills right down the middle.
- Or, you might have paid most of the deposit and then forked out far more towards the mortgage payments that your partner did.
It doesn’t matter either way – in the eyes of the law you still share the home equally. You could contest this in court, but that would be time-consuming, costly, and might not end up the way you wanted anyway. You can only sell the house if both of you agree – this may cause problems if one of you wants to sell and the other doesn’t but can’t afford to buy out the remaining share. Tenants in common
With tenants in common a couple, or pair of friends or family members, each owns a share of the house (could be half each or a different division depending on who has put more money into it from the first). - The difference between this and joint ownership is that there’s a technical division of the property, so each owner can leave their share of the house to anyone they like. This can work well in certain circumstances: it gives each partner an element of control, but it can be tricky if one dies and leaves their share to someone else.
- It’s a good idea for friends or siblings who share ownership of a property. If you and your brother inherit your parents' house together, the chances are you would rather leave your half share to your spouse or your children rather than passing it on to him.
For the majority of people, joint ownership is still the best option though. - Unless you've got such a valuable house that planning for Inheritance Tax through the generations is a necessity, it doesn't really seem fair to inadvertently shackle, or be shackled by, someone you have loved.
If things go wrong If you’re married and you get divorced, both parties have a right to a share of the former marital home. But, if you have just been co-habiting, there’s no automatic right. You can argue for a share of your home: - If the home is in both of your names. Or,
- If you can prove you directly helped buy the home or improve it in some way. For example, if you paid the deposit or mortgage instalments, this would constitute a beneficial interest.
If you have contributed, you have actually ‘bought’ a little bit of the house even though the title deeds don't say you have. But, it’s tricky. Say, for example, one partner has paid the mortgage while the other has covered all the household bills. This might have been convenient – and even felt like you were sharing things out nicely – but it leaves you unequal in the eyes of the law. The non-mortgage payer has to prove you agreed to pay those bills – as a contribution to buying the house – to free up the other partner’s income. Statements from a joint bank statement should show your contributions. |
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