Buying a home unmarried? Here’s what you need to know

Perhaps you thought there wasn’t much difference when buying a home with your girlfriend or boyfriend to if you were married, but there are few things to take into consideration before applying for that mortgage and signing any agreements. There’s much more to account for than paint colours and which tiles to put in the kitchen!

Relationships can go sour, so it’s important you understand what can happen should one of you need to move out of the home you have bought together. Here are a few things to keep in mind…

You should consider carefully what type of ownership you want

When applying for a home and mortgage as an unmarried couple you will need to decide whether you wish to be classed as ‘joint tenants’ or ‘tenants in common’. Here are the differences:

Joint tenants – If you die, the property automatically goes to your partner, you have equal rights over the property but you cannot pass on the ownership in your will.

Tenants in common – You can leave your share to someone in your will. If you die your share doesn’t automatically go to the other owner and you will own different shares in the property.

You should decide what type of property you want

Establishing how many rooms, the size of the garden and whether you have a driveway are all very important aspects of buying a home together as an unmarried couple. Your perfect property may already be in existence and on the market to buy but it may be that a new build suits you better. Many developers offer a variety of new housing which may prove attractive to buyers as you and your partner can move into a property that is genuinely new. Not only that, some developers allow buyers to add their own personal touch to kitchen design and style, and may also offer incentives to help buy and move.

Take into account who is paying the deposit

If your deposit is a gift from a third party then this needs to be stated in the mortgage agreement to ensure that should something go wrong, the right person receives payment.
If the deposit is a ‘loan’ then a pre-purchase agreement should be set up to ensure the repayment is covered.

A joint mortgage links your credit reports

Once you sign up for a joint mortgage you and your partner will be linked on credit reports, this means that in the future if a creditor is looking at your history theirs will show up too and may be also taken into account. Additionally, if you are looking for a mortgage and have bad credit you may be denied. Companies like Simply Adverse offer help to those who are trying to get mortgages with bad credit.

You can avoid the ‘cupid tax’

In April 2016, the Government introduced a new tax in an attempt to prevent buy to let investors buying more property and therefore freeing up homes for first time buyers. However, those who are married and looking to buy a second home cannot do so without incurring the tax charge but those unmarried and cohabiting can buy a property in each of their names, avoiding the expense altogether.