Are you looking to buy a home with your partner, but aren’t quite sure where to start out? Take a look at this article to find out what you should be doing.
How to buy a property with your partner
In many ways, buying a property with your partner is similar to buying a property by yourself. Instead of holding all of the weight on your shoulders, however, you can share the responsibilities with someone else.
The first step you need to cover when buying a property is working out how much money you can afford to spend. This should be based on more than just your income – you should also consider how much you’ve already got in the bank, as well as how much you’ve got tied up in debt. If another person is involved in the purchasing process, you’ll combined buying power will be accounted for.
When buying the property, you’ll need to discuss with your partner how the ownership will be handled. You should never have it as just a loose, informal understanding – you should make sure that it’s written up in a legal contract. This way, you’ll be able to protect both parties’ interests.
Should you choose joint tenancy or tenants-in-common?
In Australia, these two are the most common forms of property ownership. Although they both amount to the same thing, they have entirely different meanings on paper.
A tenancy-in-common allows for each party in the agreement to own a specified chunk of the home. For example, if you pay for 70% of the mortgage, you’ll be entitled to 70% of the profits.
Comparatively, a joint tenancy doesn’t make the distinction between how much each party has invested – it simply splits ownership down the middle. As a result, any capital gains made from the property will be divided equally between the involved parties.
This option is popular among married couples, as it allows the other to inherit their share in the property in the event of their death. A tenancy-in-common won’t always allow for this to happen.
A tenancy-in-common will allow you to make a clean break from the investment if need be, claiming half of the profits with ease. With this, however, you don’t necessarily get the privilege of survivorship.
A joint tenancy, however, is more specific with the financial attributions, but will allow for survivorship. If you’re unsure of which option works best for you, consult with an experienced local financial adviser.