Choosing to combine finances with your partner is a big decision. If you are about to start looking for a joint mortgage to buy a property with someone else, you might want to be aware of all the factors.
Joint Bank Account?
It can make life easier in some respects, but joint bank accounts are not a requirement for a joint mortgage, so it’s worth considering the pros and cons of combining all of your income, assets, and debts before making this big decision. It would also be prudent to speak to an independent financial advisor for impartial, up-to-date specialist advice on the matter. We’ve weighed on the matter of joint finances here.
There is no one right way to approach joint finances because every couple’s situation and requirements are unique. This is why it’s so important to seek professional advice to determine your options and best way forward. You must also thoroughly talk things through with your partner—your income and debts; credit history; attitudes toward money; disposable income; and expectations about what joint finances mean to each of you. It’s best to cover all of these things beforehand to make sure you’re both on the same page. It can save a lot of time and helps to avoid disagreements further down the line!
Buying a property with someone else
To buy a property with another person—whether a spouse, civil partner, partner, family member, or friend—you need a joint mortgage. There are many benefits to buying property jointly.
- It can be easier to get your foot on the property ladder if you can’t afford to buy somewhere on your own.
- You can raise a deposit in less time, or raise a bigger deposit.
- Both incomes are taken into consideration, which may enable you to borrow more or buy a bigger property.
- Bills, expenses, and responsibilities are shared equally, which makes it easier to manage finances, and it also provides more disposable income or extra money to put toward your mortgage.
However, you also need to consider the implications of buying a property jointly. It requires trust and communication because you will both be liable and responsible for the property, mortgage, and bills. If one person loses their job, becomes ill or passes away, or wishes to leave and sell the property, you will still be required to pay the full amount of the debt and any household bills on your own.
Title deeds and ownership share
In the case of a joint mortgage, you would add both of your names to the title deeds to ensure you both have rights to the property. But how much of the property does each person own?
Your financial share of the property can be equal or different. Perhaps one person is paying all or most of the deposit; making a larger contribution toward mortgage payments; or paying for renovations, improvements and repairs. In the event your relationship should break down, or you’re buying with a friend or family member, it’s wise to put an agreement in place to specify each person’s financial share of the property. It helps to avoid confusion or disagreement in the future.
A survivorship clause is something you may wish to consider adding to the title deeds. It is a legal cause which specifies that your share of the property will pass to the other joint owner in the event of your death, and vice versa. Without such a clause, this is not guaranteed. It also means that one joint owner cannot leave their share of the property to someone else in their will. This is something you should discuss with your solicitor.
Legal advice is vital at this stage so we do recommend you speak to professionals before moving forward. At The Mortgage Hub, we are more than happy to assist you in finding the right mortgage and the best available rates for your circumstances.
The Mortgage Hub is an independent mortgage advisor serving the greater Glasgow area. Whether you are planning to buy your very first home and need the right first time buyer mortgage, or are looking to re-mortgage due to a house move or to growing family – we understand your journey is so much more than a financial process, it’s a journey to achieve your dreams, improve your lifestyle and achieve your true potential.