08 Mar 2017
First comes love...then comes mortgage.
More and more people are buying a home together before they get married. One American study found that one in four younger couples bought a home before ‘tying the knot’ – nearly twice as many as those aged 45+. Yet it’s also one of the biggest, fraught and most complicated financial decisions you can make together.
One of many potential pitfalls is that the ownership of assets may not be so clear-cut if you don’t get all your paperwork in order. Aine (not her real name) discovered this the hard way.
At the time of this interview with the Irish Independent, she had just split up with her partner of seven years, with whom she had bought a home. However, while she paid “half the household bills”, her name was not on the title deeds. And she claimed her partner wanted to sell the apartment and give her nothing.
Although it had yet to be decided at the time, “Aine” may have had rights to the property in question. Indirect contributions, such as work in the home and paying for general household expenses, may still be taken into account.
But it saves everyone a lot of hassle if you clearly outline from the outset who owns what.
Here’s how you should get your house in order:
See a financial advisor
As a married couple you'll soon be on the same team, so you might as well get in some early “pre-season training” by getting your financial act together in advance.
Talk to someone in the know, like an EBS mortgage advisor, even if it’s just popping in to your mortgage lender’s office for a quick chat.
Have a joint account
This is particularly important as it not only saves a lot of hassle when it comes to paying the bills, it will show what each of you contributed to the important household bills during the mortgage term. So you will avoid many of the problems encountered by “Aine.”
Know your rights
There are two ownership options for joint borrowers: joint tenancy and tenancy in common. With the former, the property is owned by both partners with the intention that, if one dies, the other will own all the property (although it’s not always that simple).
Tenancy in common divides up the ownership. It can be divvied up 50/50 – but the proportions can also be 60/40, or 70/30 and so on. You can leave your share to the other borrower, but you must make a will stating this wish. If no will is made, the share of the property goes into the estate of the deceased.
The distinction between the two is bit more complicated than this and would be better explained by your solicitor.
Make an agreement
Also recommended is a co-ownership agreement, which sets out the rules in the event of a dispute in the future. It doesn’t seem very romantic to talk about what happens if, say, one person wants to sell their share, or is not making payments.
But if you can work through this sort of thing together, openly and frankly, you’re well on the way to being a marital team. Again, you should discuss these options with your solicitor and carefully consider which is best for you.
To find out more, why not arrange a 30 Minute Mortgage Meeting today with your EBS mortgage advisor?
EBS d.a.c. is regulated by the Central Bank of Ireland.
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