Purchasing property with a partner can be an exciting and financially savvy decision. Whether you’re considering buying investment property with partners or learning how to buy a home with a partner, joint ownership of a property offers numerous benefits.
It allows you to combine incomes, increase borrowing power, and share expenses. However, buying a home with a partner requires careful planning and consideration.
In this article, we will explore essential factors to consider when purchasing property with a partner, whether you’re looking to buy a home as a couple or buying investment property in partnership.
Assessing Borrowing Power
One of the first steps in buying property with a partner is to assess your joint borrowing power. While purchasing with a partner may improve your borrowing capacity, it’s essential to remember that lenders consider factors such as credit history, income, job security, and outstanding debt.
Take the time to review each partner’s financial situation and discuss any potential challenges that may impact your ability to secure a mortgage.
Seeking advice from a mortgage broker, like Soho Home Loans, can help you understand the maximum amount you can borrow and explore different financing options.
Choosing the Right Ownership Structure
Selecting the appropriate ownership structure is a crucial consideration when buying property with a partner. The three common options include
- Joint tenancy
- Tenants in common
- Sole ownership
Joint tenancy provides equal ownership rights, while tenants in common allows for different ownership percentages. Sole ownership means one partner owns the property individually.
Each structure has its pros and cons, so it’s essential to discuss with your partner and seek legal advice to determine the best fit for your situation.
If you’re married but are buying a house without your spouse, you will also have to be aware of legal considerations like the Family Law Act of 195.
Sharing Upfront and Ongoing Costs
When purchasing property with a partner, it’s crucial to have a clear agreement regarding the sharing of upfront and ongoing costs. These expenses include stamp duty, soliciting or conveyancing fees, mortgage repayments, insurance, utilities, and maintenance.
Even though this can sometimes create a tense environment, there are ways to avoid stress as an unmarried couple buying a house (and even as a married couple!). Open and honest communication is key to avoid misunderstandings and financial strain.
Discuss how you will divide these costs and consider creating a joint account or contributing proportionally based on income levels. It’s also essential to plan for unexpected expenses and set aside funds for repairs or renovations.
Planning for the Future
As you embark on the journey of buying property with a partner, it’s vital to plan for the future. Discuss your long-term goals, potential life changes, and exit strategies.
What will happen if one partner wants to sell their share? How will you handle financial challenges, such as job loss or significant expenses?
It’s wise to consult with a financial advisor and consider creating a contingency plan to address such situations. Additionally, consult a legal professional to draft a partnership agreement that outlines each partner’s rights and responsibilities.
Legal Considerations
Engaging legal professionals who specialize in property law is crucial when purchasing property with a partner. They can provide guidance on legal requirements, draft necessary documents such as a partnership agreement, and ensure compliance with relevant regulations.
A partnership agreement can address important considerations such as ownership shares, financial contributions, dispute resolution mechanisms, and provisions for potential changes in the partnership.
Seeking legal advice will help protect your interests and provide clarity on your rights and obligations.
Wrapping up on purchasing property with a partner
Purchasing property with a partner offers numerous advantages, but it requires careful consideration, effective communication, and professional guidance.
By assessing borrowing power, choosing the right ownership structure, sharing costs, planning for the future, and seeking legal advice, you can navigate the process successfully and establish a solid foundation for your joint property ownership.
More on purchasing property with a partner
Can you purchase property as a partnership?
Yes, you can purchase property as a partnership in Australia. This means that you and your partner will own the property together. There are two main types of partnerships: joint tenancy and tenants in common.
Joint tenancy is the most common type of partnership. In a joint tenancy, both partners have an equal share in the property. If one partner dies, the surviving partner will automatically own the entire property.
Tenants in common is a less common type of partnership. In a tenants in common arrangement, the partners can have unequal shares in the property. For example, one partner might own 60% of the property and the other partner might own 40%. If one partner dies, their share of the property will go to their estate, not to the surviving partner.
How long should you be with a partner before buying a house?
There is no one-size-fits-all answer to this question. Some people might feel comfortable buying a house with their partner after just a few months, while others might want to wait several years. It really depends on your individual circumstances and how committed you are to the relationship.
Should we buy a house together or separate?
There are pros and cons to both buying a house together and buying a house separately. If you buy a house together, you will have to share the costs and responsibilities of owning a home. This can be a great way to build equity and create a shared financial future. However, it can also be risky if the relationship breaks down and only one partner owns the house.
If you buy a house separately, you will have more control over your own finances and you will not have to worry about the other person’s debts or liabilities. However, you will also miss out on the benefits of shared ownership.
Ultimately, the decision of whether to buy a house together or separately is a personal one. There is no right or wrong answer, and the best decision for you will depend on your individual circumstances.
