A De Facto Couple’s Guide to Buying a Home

A de facto couple’s guide to buying a home

More than 79% of couples who married in 2014 lived together first, a 3% increase in just 12 months, Australian Bureau of Statistics data shows.

Many of those couples will buy their first home before wedding bells ring – but even if you and your partner don’t ever plan to tie the knot, buying a property together comes with a similar commitment.

It’s not exactly the height of romance, but there are practical considerations when you’re buying a property without a marriage licence.

You may want to consider drawing up a contract that states exactly what will happen to the property in the event of a breakup. You may also need to structure the ownership of the home to protect your interests if your partner passes away. You should seek advice from your lawyer or conveyancer on this.

Here’s what you need to know before starting your property search.

APPLYING FOR A HOME LOAN

Applying for a home loan can be a little more complicated without a wedding ring. While home loan providers tend to view married couples as a single entity, unmarried couples are sometimes assessed on their own.

You may choose to apply for a home loan on your own, but this could leave your partner without an ownership stake in the property and therefore financially vulnerable if you break up.

cohabiting couple

You don’t have to be married to purchase a home together.

A home loan specialist should be able to explain the various ways you could structure a home loan to suit your individual needs.

PROTECTING YOUR INTERESTS

Legal talk may feel like a romance killer, but break ups can be especially tricky for unmarried property owners who don’t have a formal agreement in place. It’s just a little extra peace of mind in case things don’t go to plan – and may help make an unhappy situation that little bit easier.

Nice brick houses

Keep the paperwork up to date for extra peace of mind.

Ask your solicitor to draft an agreement that clearly sets out how the property will be divided in the event of separation.

This formal contract could document whether the property will be sold in the event of a break up, or how one party will be compensated for their share in the property if they move out and the other party wants to continue living there.

A co-purchase or co-ownership agreement clearly sets out how the property will be divided.

SETTING AN OWNERSHIP STRUCTURE

It’s never going to be a fun conversation, but couples need to decide on an ownership structure that will determine what will happen to the property if one of you were to pass away.

Couple unpacking boxes moving house

There are generally two types of ownership structures: Tenants in Common, and Joint Tenants.

Where you purchase as Joint Tenants, the ownership of the home automatically passes to the surviving partner. However, if you purchase as Tenants in Common, the deceased person’s will determines how their ownership share will be divided. If there is no will, there are laws that specify how the property will be distributed.

Whether you’re married or not, buying a home with your partner is a big financial commitment. But it’s also a very exciting step.

Make sure you have a plan in place and are prepared to have a few practical conversations up front.

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