Mortgages and relationships

A mortgage is very likely the largest financial commitment most of us will make in our lifetimes, so if you are making that commitment with a partner – whether or not you’ve made other commitments already, such as marriage or having children together – it requires additional preparation and much discussion.

Taking a joint mortgage maybe a necessity to borrow the amount you need and as a couple you must consider – and tell your broker or adviser – your future plans. For example, if you are moving to provide space for a new or growing family, and it’s possible you could be down to one income for a period of time, could the other partner (the breadwinner) still keep up the repayments on their income alone? If one of you is planning a break to learn something new or start a new business, the same consideration is required.

Joint mortgages with those not in a relationship together

It’s also important to point out that not all joint mortgages are taken between spouses or partners. Siblings, friends, parents and offspring – even boss and employee – are all possible and the first three are all quite common, especially among first time buyers.

When relationships break down or needs change

So, what happens if a relationship breaks down or if a friend or sibling finds the love of their life, or simply wants their own space? What happens if mum or dad have their own plans or need to help your younger sibling, for example?

These things and many others can happen and it’s vital to be prepared for them at the outset, however uncomfortable that conversation may be understanding the options and implications of different financial transactions is imperative.

Your solicitor will often recommend purchasing property on a ‘tenants in common’ rather than ‘joint tenancy’ basis, meaning you each own the property by shares that can be specified, rather than you being joint equal owners at 50% each.

One partner may have more savings to put into the purchase or a parent may gift a deposit to one party and wish to protect it. Again the solicitor could help with a ‘deed of trust’ or 2^nd charge on the property ensuring everyone gets back what they put in if it all goes wrong.

It may then be possible for one partner to ‘buy out’ the other, if they want to remain in the property know as equity transfer

Either way, joint mortgages will always be around. If you are considering one, make sure as always you speak to a whole of market broker like us. We offer free advice and make sure you are fully prepared for what might happen in the future.

March 2019