Many people can fulfill their dream of homeownership easier if they buy with their partners or friends, and there is a way to protect everybody from unforeseen circumstances, Experian says and shares its top tips on how to do that.
Buying a property together is beneficial because you can pool your resources and opt for a bigger deposit which will allow you to get a better mortgage deal.
However, joint buying could be tricky for unmarried couples as the law is still lagging behind modern life and there are no straight forward provisions in case the relationship hits the rocks.
Nevertheless, there are ways to work around all legal obstacles and protect the two partners financially.
Experian advises to follow these 9 steps when planning to buy with your partner. Going through each and every one of them would guarantee you have taken into account all risks and are sufficiently protected against them.
1 Identify priorities
Like size of the property, proximity to good transport links and places of interest such as schools, shops ect.
2 Agree on type of ownership
You can own equal shares in the property or one of you can hold the rights to the bigger part of it.
3 Check your credit report
It is very important to know what your credit score is, as lenders would check that when deciding whether to approve your mortgage application. Experian offers a credit report service that could help you understand if you need to take steps to improve your credit history before applying for a loan.
4 Calculate the true cost of buying
Do the maths beforehand so you are clear on how much everything is going to cost. Recent studies have shown that many people end up paying much more as they had not budgeted for everything before they buy.
5 Seek financial help
Although it could cost you a little bit extra, getting advice from a finance professional can actually help you get a better deal. Experian’s research shows that 79 per cent of first-time buyers had not considered using a Help to Buy ISA while it could actually benefit them considerably. The government-supported scheme is available from this autumn.
6 Apply for a joint mortgage
Important thing to know here is that when you are sharing a mortgage your credit reports will become linked. This means that when lenders are reviewing your future loan applications they can take into account the credit score of the person you are linked to as well.
7 Make an exit plan
Even if it is not something many people would think of when they are buying together, there has to be a plan in place in case of a split. Making preliminary provisions for the event of one partner deciding to move out or selling against the other’s will, could save you a lot of hassle.
8 Draw up a living together agreement
This type of agreement settles contributions each partner would make to the household. It needs to be drawn by a solicitor and independently witnessed to be legally binding.
9 Make a will
While this may seem a bit weird it is as important as everything else. Unmarried people do not automatically inherit the share of their partner in a property. If there is no will in place, the share goes to the partner’s next of kin.
