Buying a place with your partner can mark the beginning of the rest of your lives. It’s an exciting time but you need to be prepared and fully informed. Here are 10 things you need to know when buying a house in the UK with a partner.
1. You need to have a thorough chat with your partner
It might sound obvious but most people who go into buying a house with their partner think of it as a romantic commitment rather than a serious financial commitment. Sure it’s romantic. But stepping on the property ladder is not an easy thing to do and you have be committed to the whole buying a house process as you are to the relationship. Decide what exactly you’re looking for as there are so many options when buying a house that if you don’t have the same set goals as your partner, you could end up going crazy. Some things you need to decide on are: -
•Flat or house?
•Freehold or leasehold?
•New build or old build?
•Auction or estate agent?
•Shared ownership or shared equity options?
•Amount of deposit?
•Fixed rate, variable or other mortgage?
These are all things you need to have mutually agreed before embarking on buying a house. Have a look at our comprehensive list of 41 things you need to know when buying a house in the UK.
2. Decide if you want to be Joint Tenants or Tenants in Common
Firstly, know the difference between the 2.
Joint Tenants
A joint tenancy is when a house is bought and split equally between 2 to 4 people; each owns an equal share of the property. Joint tenancies are usually the preferred option for married couples and people in civil partnerships.
Things to consider before going into a joint tenancy:
•If one of you dies, the property (and mortgage) will automatically pass to the other owner (or owners) who will then be responsible for paying off the remainder of any mortgage debt.
•You either all pay cash or all get a mortgage. Even if only one person needs a mortgage, all of the tenants would have to take out a joint mortgage together.
Tenants in Common
Tenants in Common can be entered into by up to four people who could be friends or relatives who want to buy a property together. In contrast to joint tenancy, with tenants in common you don’t have to own equal shares of the property. If you earn more than whoever you are buying the property with, you could agree (in writing, of course) that you will pay more towards the house and have a greater share.
Things to consider if you want to enter a Tenants in Common agreement:
•Since each owner can each act individually, they are free to leave their share of the property to a beneficiary in their will.
•If one of you dies, the house does not automatically get passed to the other owners - so make sure all wills are in place.
•Inheritance tax could still be payable (unless the co-owners are married or in a civil partnership).
•Co-tenants are allowed to mortgage their share of the property (although finding a lender who will fund them is very difficult as the lender wouldn’t be able to simply repossess the property as they usually would as there are other owners involved).
Decide which agreement is best for you and make sure you enter into the relevant agreement.
3. Break-up… Hypothetically
Although a break-up is not a scenario that two people who are looking into buying a house together have at the forefront of their minds, you need to know what will happen if you do break up. Sure, you love each other, two salaries will give you better financial options (property and mortgage wise), and you’ll never want to break up, but let’s face it, we all know of someone who got stuffed financially after a break-up. Although we’d like to think it’ll never happen to us, it’s worth discussing and knowing where you’d both stand should things go pear-shaped.
4. You should get a trust deed
Also known as a Declaration of Trust or a Cohabitation Agreement, the trust deed takes care of important and touchy subjects such as:
•protecting the amount you have put into the property if each of you is contributing different amounts
•what happens if one of you stops paying the mortgage
•what happens if one of you wants to sell the property
•what happens if you sell the property
•what happens if you want to end the agreement
•how much notice you need to give to end the agreement.
The trust deed should be signed in addition to your Tenants in Common or Joint Tenancy agreement as a separate document entirely.
5. Know your rights
As a joint owner, both you and your partner:
•have an equal right to stay in the property
•have an equal right to return if ever you move out
•cannot evict your partner (or change the locks)
•need the consent and signature of the other to sell the property
•need the consent and signature of the other to raise a mortgage or loan against the property.
Make sure you know where you stand legally. Talking of which…
6. You’ll need a solicitor
Since you’ll need to hire a solicitor anyway for the whole buying-a-house process, employ them from early on to help draft your ownership agreement and trust deed too. Check out The Law Society for help in choosing the right solicitor for you.
7. You’ll need life insurance
Life insurance is imperative in joint tenancy agreements because if one of you becomes ill, unemployed or dies, the other person is left with the remaining debt. Life insurance is designed to take care of the mortgage repayments in extenuating circumstances, so you can imagine, it’s pretty important. Have a look at this guide to getting joint life insurance and also look into how you can save money on your life insurance which includes a list of the top insurance brokers in the UK worth getting quotes from.
8. It's hard work
The whole thing can be gruelling and can take its toll on you. 'We bought our house in 2014 and it was the most stressful thing I have ever done,' says Gail, a solicitor from Blackheath, London. 'We must have seen 30 places. We offered on 8 and got rejected on 7. You had to be on top of the estate agent 24/7 and then there would be 20 other people at the viewing the day the house came on the market. You’d offer asking and they would have at least 5 other asking price offers by midday, so the property would go to sealed bids. We had about 6 agents on speed dial and were calling them before properties hit the market.'
And this was from no lack of financial stability. 'We’re both solicitors, and both on 6 figure salaries. We had lived with my partner’s parents for a year and had managed to save up £80k for a deposit and £30k for stamp duty. We had a mortgage in place, no chain, were ready to move, and viewing and offering on everything, sometimes up to £30k over asking. But we could not get a property for love nor money. House prices were going up 15% over the course of the year in Blackheath. We were trying for a year, and we were getting nowhere.'
9. You both need to share responsibility in the buying process
And not just financially (that’ll be taken care of in the agreements you’ll sign). Make sure that you support each other emotionally too. 'We had to work together,' says Gail. 'It worked out well because I did most of the research and the negotiating but when it got very stressful, my partner was was able to swoop in and be firm with the agent. You need to be team.'
10. It’s all worth it in the end
'When we walked into our flat, I just knew,' recalls Gail. “I couldn't talk and I couldn’t believe how wonderful it was. When we left, I just said to my partner, ‘that is our home. We have to get it’. And we did. And it's perfect.'
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This article originally appeared on The Debrief.