18 Mar Buying a Property with your De facto Partner
When applying for home loan finance with your de facto partner, one of the first questions you will be asked is what kind of tenancy agreement you wish to take out: joint tenants or tenants in common? Your answer will depend on many factors, including how you plan to share the costs and liabilities of home ownership.
As your mortgage broker, we can talk you through the options and provide individualised advice for the following issues.
Joint tenants vs. tenants in common
Joint tenancy means that you both own the property together equally. If you decide to sell, the property must be sold as a whole. Your partner will automatically gain ownership of the property if you die, without the need for a will.
The alternative is tenants in common. Under this arrangement, you will both own a share of the property, which you can sell off if you wish to leave the relationship. The property can be shared equally or you can own an individual share based on the percentage you invested.
Your partner does not automatically gain ownership of your share if you die – it will depend on what is written in your will.
If you want to keep your stakes in the property separate from your partner, a tenants in common arrangement may be worth considering. You can always change the title to joint tenancy in the future.
When working out who pays what, it’s not just the monthly home loan repayments to consider. Stamp duty, maintenance, legal and valuation fees are just some of the costs associated with owning a property.
Talk to your partner about how to manage the costs: you may want to consider drafting a budget and setting up a joint bank account for you to both deposit a certain amount each week.
What could go wrong
No one wants to think about their relationship ending sourly but an important part of property ownership is being prepared for all manner of change. Discuss with your partner what would happen in situations like a breakup, sudden job loss or serious illness.
It’s highly recommended you seek independent legal advice to work out what steps are needed to protect your property and assets if something goes wrong down the track. A written, signed document is your ultimate legal protection and can provide certainty for important issues like who will pay the bills, who will live in the house if the relationship breaks down or how you can sell your share of the property.