Thinking about buying a house with your partner? Congratulations! That’s an exciting step to be taking – and one that more and more first-home buyers are considering. In fact, according to one recent survey almost a quarter of Aussie couples who purchased a house together opted to do so before getting married.
While buying a house together comes with a great range of benefits, it’s also a major financial decision that requires some careful planning. What should you consider before buying your first home with a partner? And what kind of preparation will help you succeed once you’re ready to buy property together?
Benefits of Buying a House with a Partner
Deciding to buy a house with a partner can make the journey towards homeownership significantly easier. For example, by pooling your resources you may come up with a larger deposit. This could lower your loan-to-value ratio (LVR), which could, in turn, help you avoid being charged Lender’s Mortgage Insurance (LMI). A lower LVR can also make it easier to secure loan approval and competitive loan terms.
Applying for finance together could also boost your potential borrowing power since you’ll have two listed sources of income. This can also make it easier to service the ongoing loan repayments.
What to Consider Before Buying Your First Home with a Partner
So, what should you consider before you start house-hunting together?
- Financial Transparency: Both of you need to be completely open and honest about your finances before you apply for a home loan. Undisclosed debts or poor credit scores could result in your application being rejected.
- Legal Agreements: Make sure you have a legal agreement in place before buying a property with a partner. Co-ownership or tenants-in-common agreements will spell out each person’s rights and responsibilities, along with agreed-upon procedures for selling the property in the future.
- Future Planning: Be sure to discuss your long-term goals before committing to such a significant financial purpose. For example, is this an investment or your forever home? Will you be renovating (and if so, when)? Do you plan to stay in the area or are you hoping to move interstate or overseas in the next 5-10 years?
How to Buy a House with Your Partner
Understanding how to buy a house with your partner will help to make the process a lot easier and less stressful. Here are some simple tips to help you prepare:
Choosing the Right Property
ake time to discuss what type of property you want to buy (apartment or 3-bedroom house?) and what location will suit both of your needs. Think about proximity to work or family and desired amenities (such as shops or schools).
Preparing Financially
If you haven’t already got one, now is the time to create a budget. Remember that, in addition to mortgage repayments, you’ll also need to cover additional expenses, such as maintenance, rates and body corporate fees.
Navigating Potential Challenges
It may not be a pleasant topic, but planning for future challenges can save a lot of distress down the track. Have an agreement in place for how you would handle financial difficulties, disagreements about managing the property or changes in your relationship.
Seeking Professional Advice
A professional financial advisor can make sure you’re on the same page when it comes to your financial goals. It’s also a good idea to seek legal advice so that you’re both clear on your responsibilities as joint property owners. And make sure you consult with an experienced mortgage broker to find the best home loan to suit your needs.
Talk to ZEP Finance About Buying a House with Your Partner
Buying a house with your partner is an exciting decision, but one that also requires careful planning. Whether you’re pooling resources for a larger deposit or planning for future challenges, preparation is key.
At ZEP Finance, we specialise in guiding first home buyers through every step of the process. Contact us today for expert advice tailored to your financial goals and take the first step towards buying your dream home together.
After studying business and finance at university, Zain initially expected to pursue a career in finance. However, his passion for property and the experience of buying his own home led him to mortgage broking. He began his mortgage brokering career in 2009 and founded ZEP Finance in 2010.
