This is Money asked experts what couples — as well as friends or family who buy together — can do to make the process as easy as possible if they no longer want to live together in the future.
Be open about your money
Before you make an offer for a home, have an honest conversation about what you can afford and how the property and mortgage payments will be paid.
One piece of advice offered by nearly all the experts we spoke to was to start the home buying process with a frank conversation about your finances.
Before you buy with a partner or group, sit down and talk candidly about your finances, says Sophia Jay White, co-founder of first-time mortgage buyer Generation Home. “The reality is that individuals rarely have identical financial situations and contribute equally.”
This can get even more complicated when someone’s parents contribute towards a new home deposit, for example.
They should be included in these conversations as well, so that everyone is on the same page about where the money comes from and what they are expected to contribute towards the purchase of real estate, ongoing mortgage payments, and maintenance.
Sign the declaration of confidence
It is important to document any money spent on the house, to avoid arguments about who paid for what in the event of a relationship breakdown
If joint property buyers do not contribute equal amounts towards the deposit or mortgage payments, it is a good idea to sign the trust declaration. Also known as a trust deed, it is a legal document drawn up by a lawyer. It shows how any equity will be divided if the property is sold, or re-mortgaged to remove one party from the deeds, in the future.
“It can provide a set amount, or percentage, that is paid first to the majority contributing party before dividing the remainder equally,” says Marilyn Bell, partner and family law team leader at SA Law.
In the event of a divorce, the court has the power to make an order different from what is specified in the declaration of trust. However, Bell says it is still “worth doing” as the document can be used as evidence in such cases.
It can be especially helpful if one party’s parents gift or loan some money for their deposit, to avoid future disagreements about whether the ex needs to be repaid.
Homeowners should ensure that the trust declaration is updated if one party begins to contribute more or less to the cost of the house, or if significant funds are spent on the property – for example building an extension.
Keep track of who pays what
Making payments to your home from separate bank accounts can help avoid arguments about who paid for what, should the relationship fall apart later.
It may not sound particularly romantic, but it’s also a good idea for each member of the couple to pay their share of the home-related costs from their own bank account, rather than pass it on to the other partner for payment in full.
This creates a paper trail that can avoid arguments about who paid for what if the relationship later falls apart.
“It is always helpful to document contributions to purchases and mortgages in a straightforward manner,” says Bell.
For example, each party can pay the transfer attorney from their own bank account. They don’t have to muddy the waters by passing it from one to the other before the recipient pays the attorney.
You cannot “divorce proof” your entire home
While all of the above steps are helpful to take, many of them depend to some degree on the breakup being relatively amicable.
“In the event of an acrimonious divorce, these legal remedies are unlikely to hold up in court, especially if there are children involved,” says Scott Taylor Barr, financial advisor at Carl Summers Financial Services.
In an acrimonious divorce situation, these legal remedies are unlikely to hold up in court, especially if there are children involved
Scott Taylor Barr, financial advisor
And no matter what steps you take to divide ownership of your property, your mortgage lender will still consider anyone named on the mortgage to have joint liability – meaning that if one partner doesn’t pay, the other will be forced to do so or risk harm. . Credit rating.
Adds Taylor-Barr: “For many years, lenders have given mortgages on a joint and several liability basis — meaning that all parties to the mortgage are responsible for 100 percent of it, not just what they see as their ‘share.'”
A party cannot be relieved of its obligations under the mortgage unless the lender agrees to release them. No amount of paperwork between borrowers can change this.