Hey mate, congratulations! You are planning to buy a new property for the first time! We are super thrilled for you. We know it is no easy feat gathering the hefty sum that is required for a down payment. Did you ever consider investing in a property with a friend or your partner? You may be able to raise a higher amount of capital and enjoy buying a bigger house. However, before you get too excited, keep in mind that this is a complicated situation. If anyone defaults, you could get into trouble and be held legally responsible for the missing payments. It would be best before you place your trust blindly in anyone – you may want to do your homework and study the procedure, so you are well aware of all the stages it includes. This way you will be best equipped to make the right decision. As you commence analysing the process, you will begin to comprehend that knowing each possible detail will be vital for you.
Perhaps you find an amazing property with potential that you wish to renovate. It might require new pipes, new flooring, new electric wires or even new boiler insurance, you want to make sure that your partner will be with you every step of the way. We are not just referring to financial decisions and input but actually referring to the effort, time and energy renovating a new property takes. It is critical that you find a way to protect your interests.
This is what you can consider when deciding or not whether to buy a new home with another person, be it your friend or your spouse:
- Tenancy Contract
You will have two options when contemplating the nature of your tenancy: tenants in common or joint tenants. Wondering what the difference is between the two? Read on to find out! We got you covered.
Joint tenants: Your ownership percentage will be equally divided with the number of owners present. For instance, if you are part of a married couple or in a civil partnership – you may each claim a fifty per cent stake in the ownership. We wish you the best of health – but in the event of a death, you will automatically inherit the deceased party’s share along with his or her responsibility to pay up the remaining mortgage amount.
Tenants in common: What does tenants in common include? It is actually quite straightforward. As a tenant in common, you can be part of a group of four or so people, be it your common friends or your inner family, deciding to come together to buy a whole new property and will own it in different proportions. This is a slightly more complicated process than the first option. For instance, a shareholder can name her inheritor as whomever she pleases. The inheritance tax is to be paid by all co-owners. As a co-owner, you will also enjoy the right to mortgage your own personal ownership stake if circumstances so require you. The other co-owners cannot object to it. Given the intricate nature of this ownership agreement, a lot of lenders do not accept this kind of contract as the financial institution will not be able to just claim the asset as his own if provided as collateral.
2. Know your rights
If and when you do decide to buy a house with your property, he or she will enjoy the same right as you to dwell within it. They cannot be convicted legally, and you will need your partner’s legal signature to go under debt by placing the property in question as collateral. If you wish to apply for a loan, you will again require your partner’s legal signatures just like they would require your permission to do the same.
3. Co-shared responsibility
Buying a property can drain you of your mental and physical energy. You see, it is not just the economic liability that has to be shared jointly. You will want your partner to be an equal participant throughout your home buying journey – whether it ranges from searching potential properties on real estate websites, booking appointments with banks and real estate agents, speaking to property agents etc. It is a very stressful time for all prospective homeowners- so do not worry you are not alone in this boat. Treat this time as a chance to let your bond with your partner become more powerful. We know you can do it!
4. Open communication
This may appear as common sense to you, but we still think it is important to reiterate – communicate, communicate and communicate! This is not just the start of a new stage in your love life – but a huge fiscal commitment that will stay on for years and years to come. Make sure that you two are ready for it. How? By simply talking and discussing any possible concerns in a civilised manner. You are promising to each other to stay together. Try to make a checklist together to identify what both of you will consider as the ideal property. Have a nice meal and make it together. Here are a couple of more things you both may want to have a conversation about:
- Do you wish to buy an older property that can be renovated or a completely newly constructed home?
- Do you want to invest in a leasehold or a freehold property?
- Do you want an apartment or a house?
- How far do you want to go away from the city?
- What will the ownership stakes be?
- How will the costs be shared?
These are just a few of the variables you may want to consider before starting your home buying journey. Just remember to remain patient and not to get upset even if you find a great bargain but lose out on it. The clock is ticking on amazing property deals so be mentally ready to say yes quickly if you find something that you like. We know you got this!