3 things to consider when taking out a mortgage with your partner


Buying your first property and getting your first home loan together is a massive step forward in your relationship. It may even be a bigger commitment than saying 'I do' and MoneySmart data reveals that it will certainly cost more. The average amount spent on a wedding is just over $36,000 – whereas the Australian Bureau of Statistics puts the average property price in Australia at over $620,000!

Considering the commitment and the massive cost involved you want to be absolutely sure you get it right the first time. We have a closer look at buying with a partner to make sure that your endeavours lead to a better financial future – instead of causing trouble in paradise.

Tenants in common or joint tenants?

When buying your land and property as joint tenants, it will mean that you both own it together. If one partner passes, the other assumes full ownership. You're both equally responsible for the property and any income or expenses. This is the ideal option for married buyers, but perhaps not for newer relationships as splitting the home can be difficult in the event of a breakup.

You've got to worry about sorting your first home loan before you even think about decorating!You've got to think about sorting your first home loan before you even consider decorating!

On the other hand buying as tenants in common will mean that you separately own an agreed upon percentage of the home with your partner. You will be responsible for expenses and income from the property, according to the percentage that you own. If you break up, selling your share is a relatively easy process.

Get on the same page and make it official

When you've discussed in depth what ownership structure is right for you, it's time to draw up a co-ownership agreement and make it official before you buy land or property. This is a legally binding document and should include answers to the following questions:

  • How will will the title to the property be owned?
  • Who is responsible for what costs?
  • Who will occupy or use the property?
  • When can one party require the sale of the property and what happens in the event of a sale?
  • What if one partner is unable to make their share of payments?

Going through this rigmarole with the one you love may seem pedantic, but it'll make the entire process easier in the long run. If you fail to plan you plan to fail!

The logistics of taking out a mortgage together

Draw up a co-ownership agreement and make it official before you buy land or property.

You and your partner will presumably need to take out your first home loan in order to buy property. If your partner can't or wont pay their share of the mortgage your lender usually has the power to come after you for the entire amount.

A recent financial literacy survey by MoneySmart showed that 52 per cent of women say they save first and spend second while 48 per cent of men say the same. While sex probably isn't a determinant in who's the better saver there's likely to be one spendthrift in the relationship and one who splashes cash – which could cause problems.

Explore your options to limit your liability with your home loan by talking to a legal professional. With the right advice you may be able to take out the mortgage separately as tenants in common or otherwise limit your exposure in the event that your partner, for whatever reason, doesn't keep up their end of the bargain. 

If you need advice on navigating a mortgage and home purchase with your significant other get in touch with Mortgageport today. We can help make sure your home buying experience is as straight forward as possible. 

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