Buying
Getting a mortgage together
Mortgage lenders tend to treat cohabitants broadly the same as married couples and civil partners. Where you may encounter a difficulty is in the insurance requirements that go with the mortgage. Some mortgage lenders require that you have life insurance as a condition of the loan. Single men are treated as a higher risk by insurance companies. It is possible to get past this issue by choosing a mortgage that does not have a compulsory insurance clause.
Buying together
If you are planning on buying
a property together for the first time, you will need to decide how
you are going to own the property, agree on it, and make this clear
in the documents that are drawn up beforehand. It is always a good idea to make
a Will but especially so if you own property.
Joint ownership, rather than putting the property in only one name, would ensure that each partner has a legal share in the property. If you were to split up and the property is in one person's name only, legally the non-owner has no right to a share of the property. This situation can be altered if an agreement is drawn up or if 'trust principles'* apply.
There are two types of joint
ownership:
Beneficial Joint Tenants
This means that the whole property (and the proceeds of its sale) belong to both of you as one. Neither of you have a separate share which you can sell or leave to anyone else in a will. If one of you dies, the other becomes the owner of the whole property. This happens automatically without any further formality. This type of ownership suits most married and civil partnered couples.
Tenants in Common
This still means that the property is owned jointly but here each of you has a separate unequal share. If one of you has contributed more money towards buying the property, you may decide that it is fairer to reflect this in your shares: so you could have one of you owning 30% and the other 70% of the property...
If the property is owned like this and one of you dies, that share can be passed on in that person's will or, under the rules of intestacy**, if no will has been made.
If a property is owned as tenants in common it is important for there to be a separate document or deed setting out those shares in the property and how the proceeds of sale would be divided if the property was sold. Such a document is usually called a 'Trust Deed' or a 'Declaration of Trust'.
If you choose Tenants in Common it
is important to:
1) Make a 'declaration of trust' -
Your solicitor will be able to draw up this legal document that will
set out each person's share of the property and the procedures for
selling if one partner decides s/he wants to sell while the other
does not.
2) Make a Will - Because this way of
owning property does not make your partner the automatic beneficiary
of your share of the property, it is very important that you both
make wills to say what you would like to happen to your share should
you die.
Owning together
If you have already bought a property,
you may not be sure how you own it. It is a good idea to find out...
How do you find out how you own a property?
For most properties there is a record of ownership at HM Land Registry.
You will need to get a copy from HM Land Registry to check up to date
information - you can do this via the Land
Registry online service.
Moving in together
If your property is already owned
by you and/or your partner, and one of you has moved into that property,
it is likely that the property is in that person's name. This is something
that you need to talk about, especially if you or your partner have
begun to make contributions towards the mortgage, bills, and/or general
maintenance of the property.
Changing the way you hold the property
Try to agree at the beginning what
the original position was (i.e who owned the property) and what each
of you agree the new arrangements are. Make a short written record of your agreement. Preferably the agreement will be put in the form of a declaration of trust.
You may be able to change a Joint Tenancy
into a tenancy in common at a later date but you will not be able
to change a Tenancy in common into a Joint Tenancy.
Glossary
* Trust principles: Trusts are created in order to hold assets for the benefit of certain persons or entities. A written declaration of trust states the terms and conditions for the distribution of assets.
** Rules of intestacy: If a person dies without having made a will, this is called ‘dying intestate’. Intestacy rules would dictate how the money, property or possessions should be distributed and who should inherit them.
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