When purchasing a property with a partner, be open about your financial situation and what you can afford. Picture: Pexels
Nothing signals long-term commitment like owning a house jointly, whether with a spouse, life partner, friend, or family member. However, like with any major collaborative decision, purchasing a house requires a significant amount of trust.
The interim chief executive of BetterBond, Bradd Bendall, says that joint ownership can help make house buying more accessible for persons who might not have been able to finance a bond on their own.
“Many people don’t realise this, but it’s possible for up to 12 people to apply for a bond together. Regardless of how many people are ultimately involved in the deal, however, always protect the interests of individuals by making sure that each party to the agreement has a clear understanding of who owns and owes what,” he adds.
Bendall advises that when purchasing a property with a partner, be open about your financial situation and what you can afford.
Plan ahead
“Bear in mind that you need financial resources, not just for the monthly home loan repayments, but also for the additional costs of buying a home.
“The legal costs include conveyancing, bond registration and transfer (unless you’re buying off plan), there will be moving expenses, and more. There will also be monthly utilities like water and electricity, plus internet connectivity, to pay for on an ongoing basis.”
Applying for home loan pre-approval is a fantastic means of determining what you can afford and putting together a budget for the home purchase before you and your partner start house searching.
It's a good idea for both parties to confirm that they may qualify for the bond based on their own income if the relationship ends. No one likes to consider this possibility, but it's always preferable to be practical about these things.
Put it in writing
When you’re in the early stages of a new relationship, it may seem superfluous to have a precise grasp of who owns and owes what, but this level of information becomes crucial if the partnership ends or one of the partners dies.
It is recommended that a lawyer establish a co-ownership agreement to relieve everyone concerned of any potential financial burden in the event of a separation or death. There are several forms of co-ownership agreements:
If there’s no ring
Even if you are not married, you can still file for a bond together.
“Banks are happy to help unmarried couples with joint bond applications, as having more than one person’s name on the home loan reduces the bank’s risk.
“The onus is on the applicants, whether they are romantically involved or just friends or family, to draw up a joint ownership agreement that covers the following: how the bond payments will be made, the apportioning of ownership and financial contributions, what happens if one of the owners defaults on their contribution, and what happens if one partner wants to move out or sell the property during the loan repayment period, or passes away,” Bendall points out.
Unlike married couples, who have a contract that governs how property is held and split, unmarried couples must create their own contract.
They should also pick whose name to include on the title document, especially if both parties pay to the bond. If the relationship ends, only the individual whose name appears on the title deed will have any legal claim to the property. This individual will also be obligated to satisfy the bond upon selling.
Keeping it in the family
Purchasing a house with family offers several advantages. Sharing monthly home loan repayments and household expenditures can significantly reduce a family’s financial strain.
If you live together, you have the extra benefit of having relatives nearby. Older family members rediscover a feeling of purpose by helping with household chores and childcare.
However, like with any joint venture, there must be a complete co-ownership agreement. Each party should sign an admission of debt form for their portion of the bond. Co-owners are recommended to get life insurance and income protection plans, which will pay out if they are injured or unable to work.
“When it comes to buying a home, a trouble shared can really be a trouble halved. But make sure the deal protects all parties. While mutually beneficial, joint purchases can be complex, so seek legal advice from an expert who specialises in property law. Done properly, buying a home with one or more people can be the start of an exciting home ownership journey for all involved,” adds Bendall.
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