More and more couples today are choosing to delay a trip down the aisle in favour of getting a foot on the property ladder, especially as buying a home as an unmarried couple is not as difficult as you might think.
“These days, it’s incredibly common for people to co-own property with friends, family or romantic partners,” says Bill Rawson, chairperson of the Rawson Property Group.
“It’s a great way to maximise your buying potential, share the responsibilities of maintenance, and lay a solid foundation for a future property portfolio.”
Because it’s such a common occurrence, Rawson says most banks and bond originators are happy to assist unmarried couples (or other partnerships) in making joint bond applications and purchases. However, the only people who can really ensure your interests and investments are properly protected are you and your partner. Here are his tips on how to do exactly that.
* Don’t even think about skipping the contract: Rawson always advises couples to think of joint property ownership as a business agreement.
“You’d never take a job or start a business without a contract in place, so don’t buy a property without one, either.”
While asking a lawyer to draw up a customised joint-ownership agreement is always the best option, he says, there are downloadable contract templates available online that can be used as affordable alternatives. Be sure you cover all the possible contingencies, including:
* How payments will be made.
* How ownership and financial contributions will be apportioned.
* How costs like insurance, maintenance, rates, taxes and home improvements will be split.
* What happens if one partner fails to make their contributions.
* What happens if one partner dies.
* What happens if one person wants to move out or sell the property early.
* Understand your liabilities: Sadly, even the most iron-clad contract can’t protect you from all eventualities and banks do not care what partners have privately agreed on. As far as they’re concerned, Rawson says, if your name is on the bond, you’re responsible for the total bond amount - not just your share of it.
* Play to your strengths: When submitting a joint bond application, Rawson says couples need to decide who will be the primary applicant. Both will be thoroughly vetted but the primary applicant tends to hold more sway over the favourability of banks’ offers.
“Choosing a primary applicant gives you the chance to put your best foot forward but don’t be fooled into thinking that income is all that counts. If you use a good bond originator, they’ll be able to assess whose financial profile is likely to be the most appealing to banks and get you the best offers. This varies a lot, depending on things like credit history, and is an area in which it can be really valuable to have professional advice.”
* Get comfortable with keeping records: Rawson emphasises being a responsible joint homeowner doesn’t end when you sign on the dotted line.
Keeping track of bond contributions and day-to-day expenses is equally important for protecting your investment.