Whether you’re engaged, newly-wed or have been together for a long time, buying a home with your partner’s a milestone to look forward to, prepare for and celebrate.
Beyond a relationship milestone, buying a home with someone is one of the biggest financial commitments and investments one can make. For most Canadians, owning a home for their family’s an important goal to achieve. In fact, 82.4% of couple-headed families own their homes. Although almost everyone has this goal, it admittedly, can be intimidating.
To help you carefully plan for this endeavor, we’ve put together a list of things to consider.
10 Things to consider before buying a home with your partner
1. Criteria for your living situation
First, decide on your living situation. Identify what type of housing you’d want to live in, what both of you want in a home and the things you’re willing to compromise on.
The tendency for first-time home buyers is to see their homes in rose-colored glasses, so it’s important to have criteria to see things clearly. In this way, you’ll be sure to buy what’s most appropriate to your needs.
2. Future plans and life priorities
It’s important to consider how you see yourselves as a couple in the future – how many children are you planning to have? Are there any family members who might live with you in the future? If you’re not planning to live there for a long time, then it may not be financially practical to complete major renovations and upgrades.
3. Next steps after purchasing your home
4. Long-term value of your home
First-time home buyers should be sure that they’re making the right investment in terms of its long-term value. From its initial value, consider potential appreciation over the years. Real-estate agents should give you an estimated projection of the property.
This is an important factor to consider in determining whether or not you should keep your home for the long-term.
5. Budget and financial contributions
The cost of buying a home, mortgage payments, furniture and home appliances are of course, significant. The last thing you’d want as a couple is to stress yourselves out about financial contributions.
In order to have a good picture of the expenses that come with buying a home, use tools such as mortgage payment calculators. This won’t just give you a picture of your mortgage when you finally own a home, but it’ll help you to determine your budget and your home selection process as you save for your down payment.
6. Current credit scores, savings and financial situation
What makes this investment different and crucial compared to your other purchases isn’t just cost, but the fact that you’re sharing this financial commitment with someone.
This means checking on your credit scores, agreeing on a plan to ramp up savings for the down payment and closing costs, as well as looking for ways to get the best bang for your dollar.
7. Getting advice from the experts
One of the ways to save money is by consulting with an expert in the home buying process, such as a mortgage broker. They’ll be able to help you get access, compare and apply for an appropriate mortgage that’s suitable to your situation.
There are many types of mortgages in the housing market that could fit the level of risk that you and your partner are willing to take, your future plans and projected monthly budget. A trusted mortgage broker will ensure that you’re comfortable with and understand the terms of the mortgage.
8. Sharing of ownership
Discuss how the both of you want to hold the title, for this has a legal bearing on the ownership of the property. Are you going to be joint tenants where there’s an equal share in the property? You can also set it up as tenants in common, where the ownership can be split between the both of you in various proportions or does one have the full ownership of the home? This needs to be decided before buying.
9. Your exit strategy as a couple
No one hopes for their own relationship to end – especially when they’re about to purchase a home with their partner. But in case the relationship does come to an end, it’s better to be prepared. This is something you should discuss with your partner. Besides, mortgages don’t end when relationships do.
One move you can consider is to agree early on that if your relationship ends arbitrarily, one could refinance the mortgage and remove the other’s name. Decide who continues on with ownership and mortgage payments, as well as who’ll pay for the refinancing costs. If this doesn’t work out, selling the house to a third party is another option as well.
10. Emergencies and unexpected events
You need to prepare for when the unexpected happens. May it be a sudden unemployment or death of a partner, talk about how you’ll face these emergencies and unexpected events. The objective is to protect your loved one from losing their home if something unforeseen happens that can impact their living situation.
Get ready for a new start
In the end, the decision on how you’ll buy your first home is up to you as a couple. Unlike your individual purchases, you’ll make this big financial commitment as a single unit. Buying a home as a couple is a wonderful opportunity to enhance open communication and rely on each other when facing tough decisions.
However, always remember that you don’t have to embark on your home-buying journey alone. Daisy Raouph’s a trusted mortgage broker and financial security advisor in the Greater Toronto Area whom you can call upon. Schedule a consultation with her today.