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Friday's Big Question: Should I get a mortgage with my boy or girlfriend?
‘It Takes Two’, the famous Marvin Gaye song tells us – and, certainly, when it comes to buying a house two savings pots and incomes can stretch a lot further than one. However, is it actually a good idea to buy a property with your girlfriend or boyfriend, and if you do will your share be protected?
You may have been together for ten years, but in the eyes of the law your relationship with your partner is no different to that of a couple who have been together for six months – or even two friends who aren’t romantically linked at all.
The thing is, although everything is going swimmingly now it might not be in a few years’ time. However, that’s not to say you should discount the idea of buying a property with your partner altogether - it just pays to be cautious.
Joint tenants or tenants in common?
Joint tenants or tenants in common, that is the question. And it’s a question you’ll have to seriously consider if you’re thinking of buying a property with someone you’re not married to. So, what’s the difference?
Joint tenants – If you choose this option, you and your partner both own all of the home, and if one of you dies the other will continue to own it in full. It won’t be passed on to a beneficiary.
Tenants in common – This option allows you to each own a different sized share of the property. It could be that you split it 50:50, but if you prefer it could be any other proportion. If one of you should die, the share that’s left will not automatically go to the surviving owner/owners, and could instead go to a beneficiary named in the deceased’s will.
Which should I choose?
You will have to have a serious discussion with your partner about which option is most suitable for you, however; legal experts tend to advise anyone who is not married to choose the tenants in common option. This is because it makes things clearer if you do split up and have to sort out what happens to your home.
Another reason you may choose to be named tenants in common is if you are each contributing a different share to the home. Perhaps you have saved up £10,000 towards a deposit together, but your parents have provided you with a gift of an additional £20,000 that you’re adding to the fund. If you are named joint tenants, you will both own and be liable for an equal share of the property, regardless of the fact you paid more. But if you’re tenants in common, you can take this into account and specify different shares.
Even if you’ve each contributed an equal sum to your deposit, it might still be worth assigning different shares to yourselves if you plan on contributing different amounts towards the mortgage. If one of you earns significantly more than the other and plans to pay a larger sum towards the home loan each month, you should reflect this in the percentages of ownership you assign yourselves. If you don’t, be prepared to receive equal sums if you sell the property – no matter how much more you paid towards the mortgage.
Being named tenants in common simply allows you to claim different shares of ownership, but if you want more detailed protection you could consider a Deed of Trust (also known as a Declaration of Trust). This is a form of contract that should be drawn up and witnessed by a lawyer and allows you to make detailed specifications of who owns what and how the money from a sale should be shared out.
For example, if you’ve contributed £20,000 more to the deposit than your partner, the document could state that if you sell the property the first £20,000 of profit goes to you before the remainder is divided between you both. You could even stipulate a timeframe you have to abide by if one of you wants to move out, giving the other time to find a new tenant or buyer to take over that share.
If you break up, a Deed of Trust can help you avoid more grief arguing over who owes or is owed what, as it will all be there in writing.
Time for a change
If you buy a home with your partner and decide to take the tenants in common route, there’s nothing stopping you changing this further down the line. If you decide to tie the knot, you can change to joint tenants free of charge. And this works the other way round too.
Building a nest together with your boyfriend or girlfriend can be an exciting time – so take every precaution that if it does end in tears, your stake in the home you built together is safe.