Sharing a mortgage

Buying a home with a partner maybe a romantic ideal, but whenever money is involved it's wise to take sensible precautions.

These days a couple buying a property is not likely to be any better off if they have tied the knot, as the married couples' allowance for those born after April 6, 1935 has been abolished.
When it comes to a mortgage, most couples buying a home will purchase a property on a joint basis and so are equally liable to meet the repayments.

Although no one expects a relationship to go wrong, and there are many advantages to owning, jointly buying a property can cause problems. It is far easier to make a quick get-away when renting!

While many couples don't bother, it is a good idea to draw up a pre-purchase agreement. This would work equally well if two friends were buying.

It would establish who would take responsibility for paying certain bills and may state that in the event of the couple breaking up, the other has the right to buy out the remaining party. It should also state if you both own a 50/50 share, or otherwise, and what deposit you each put down.

If the worst happens and you separate, you then need to decide what you want to do with the property. You will need to arrange for a surveyor to visit to decide on its value since its purchase. For the person taking on the whole mortgage they would need to pay the other party their deposit and half of the increase.

There is still no guarantee even if you are able to come up with the money that your lender will agree to this - they will want assurances that you can pay the loan on your own. A solicitor will then need to draw up new documents and have them registered at the Land Registry.

This above applies equally if you are two friends or siblings - and this is becoming increasingly common as house prices rise. Often it is the only way to afford to buy a property, particularly in parts of the south-east of the country.

As with any couple, the lender will generally use the multiple of two and a half times the joint income to decide how much can be lent. If one half of the couple earns far more than the other, then lenders may agree to pay three and a half times the higher earner's salary plus the lower earner's salary. It very much depends on how confident they are that the repayments will be made.