It’s always a big step setting up home together with your partner: it’s an exciting time for couples of any age.
Home ownership can often be a smart long-term move too, but you need to know what you’re getting into.
It’s a significant commitment in a relationship, and probably one of the biggest financial commitments you’ll ever make.
From funding your move, to the necessity of looking ahead, here are our top tips for making the transaction go smoothly, and how you can resolve matters if things don’t work out according to plan.
1. Decide how you want to deal with deposits
You might be paying in unequally.
If you are, do you want to agree with each other what will happen if the house is later sold? Will the deposits be paid back in the same proportions? How will you share any profit?
If one of you is paying more of the monthly payments for the mortgage than the other, you may want to factor that in too. Think about how you could want to deal with that, if you had to sell the house at a later date.
2. Consider the Bank of Mum and Dad
If you receive a loan or gift from your parents, it’s best to discuss with them - and with each other - how that contribution is to be treated.
If it’s a loan, will you repay this during your cohabitation, and if so on what terms? If it is a gift, is it to only one of you, or to both?
These matters can be important if, at a later date, the house needs to be sold either because you are moving on to a new property, or because you have decided to separate.
Clarity on these matters at the time you buy will help prevent costly arguments, not just with your partner, but also with your parents.
3. Review debts and hire purchase agreements
Do you plan to furnish your home together? Consider what will happen to these contents. This can be especially important if you buy a TV or a sofa on hire purchase. Whose name is on the HP agreement?
Who will be left paying the debt off, if things go wrong? How will the new furniture be shared, if it is still on HP? These matters can be important, especially if large sums are involved.
4. Bear in mind how circumstances can change
Changes in your life together will happen.
One of you may switch jobs: affecting your ability to pay the mortgage. A significant change may be that you have children together; you may choose to reduce your hours to care for the children, or you may have additional childminding costs.
Think about whether you want to be able to review the agreement to deal with life’s changes.
5. Consider setting down your arrangements in a written cohabitation agreement
When you start on your life together, it is difficult to predict what might happen later on.
An agreement gives you clarity and certainty. It can make the purchase of your house and what is to happen clear and simple at the outset: making any separation further down the line less stressful and less costly.
In Scotland, since 2006, couples who are not married or in a civil partnership can make financial claims against each other, if the cohabitation comes to an end.
The law as to what a claim might be revolves around economic “advantages” and “disadvantages.”
It can be unclear and uncertain as to what this might mean in your particular situation, and you could end up in a court dispute.
To avoid this, a written agreement prepared in advance can set out what you have agreed, for example, what will happen if the house needs to be sold for whatever reason.
6. Finally, take care of yourself
Legal advice is important when entering into any long-term agreement and that would include a cohabitation agreement.
We can offer advice and draft the agreement for one of you, and your partner should have their own solicitor to review and advise them, to ensure you both understand the terms.
Buying your first home together is a happy time; make sure that you also take care of the paperwork between yourselves at an early opportunity, so that you can settle down and enjoy your future together.
