Owning a home with your partner

Grandma has left you some money, or mum and dad have lent you some. You decided to use the money to get on the housing ladder with your partner. Brilliant.

Now you own a valuable asset, you need to think about what would happen if you were no longer around. If you arranged a mortgage you probably took out life insurance so that your partner would not be left paying your half as well. But, what about the stake you actually own in the property? Have you set out how much of the property actually belongs to you?

What is a declaration of trust?

It is an important first step to set out who owns what. A lawyer can do this via a declaration of trust. This allows you to state that, although you are both on the title to the property, you actually own unequal shares in the underlying value (the equity). There are good reasons for doing this. You may have contributed different amounts to the deposit and/or may be paying different amounts towards the mortgage. Should the split of the equity match the contributions to the mortgage? Should it always be 50:50? Should you get what you pay for (so the split varies over time)? You should think carefully about these questions and beware of settling for 50:50: this might mean a huge gift to your partner, especially if the property goes up in value.

A declaration of trust can also deal with issues such as contributions to the mortgage and who should pay for repairs and bills.

Why you should make a will when you buy a home

The next thing to think about is making a will. In a nutshell, you need to think about two issues. Where is your partner going to live if you die and should the money you used to buy the property go back to your family?

Thinking about death is not easy, particularly if you are in your 20’s, and no couple starting out together wants to think about what could go wrong. You are buying a home together so you are probably feeling confident about the future, but making some decisions now will help protect you both if things do go wrong.