Given the cost of buying property and the difficulties that come with arranging a mortgage, it is easy to see why many people are entering into a joint agreement to buy property. When you have two people pooling their money, they have more options. However, if this relationship breaks down or deteriorates, it can cause problems in determining how to deal with the property.
It is important that people are aware of the issues that can arise from this sort of deal but equally, it is no reason to automatically dismiss this style of arrangement. It can be of considerable benefit in helping people get on the property ladder and the cost of the mortgage may be less than the rental payments being paid by the parties.
It can be helpful to look at the situation as a business relationship, and this means dealing with the agreement and all related payments in a professional manner. Both parties will benefit from having a contact that outlines the agreements and protects their interests. You’ll find that the common forms of joint ownership for this sort of deal are:
- Beneficial joint tenants
- Tenants in common
For the beneficial joint tenants arrangement, there is no pre-defined agreement for the shares of the property and at the passing of one of the partner, the property is passed automatically to the other owner. With respect to the tenants in common agreement, there is a pre-defined split of the property and when the property is sold, the proceeds will be dealt with accordingly. This is a suitable arrangement if the parties are putting in different levels of money or capital.
Ensure your financial obligations are covered
A deed of trust outlines the obligations of each partner alongside information like financial obligations, contributions and ownership. It is essential to have every detail outlined and agreed upon considering the importance of the deal.
Both parties must realise that they are both liable for payments and if a partner stops paying or cannot pay, full responsibility for mortgage payments will fall on the other partner. A failure to comply with mortgage payments can lead to the house being lost and serious damage to people’s credit ratings.
It is only natural that people will have concerns about this sort of agreement but it is a decision that is backed by the National Association of Estate Agents (NAEA) when used correctly. With over 10,000 members, this is a body with a strong representation in the UK estate agency industry and their guidance is often essential for people looking to make the right decision with respect to their next property move. Spencer Harvey is proud to be NAEA members.
At Spencer Harvey, we believe that buying with a partner can be a great way to get on the property ladder but it is a big decision and one that bears thinking about. If you are considering buying Stockport property in this manner, get in touch and we’ll talk about your options. Feel free to call Spencer Harvey on 0161 480 8888 or drop us an email at info@spencerharvey.co.uk
For a free valuation please visit: https://www.spencerharvey.co.uk/valuation-enquiry.html