Is buying a property now a good idea

A common mistake couples make when purchasing a property together is viewing it as an emotional purchase. They see their relationship becoming more solid or secure when there is a financial tie. Your significant other is so serious about you that they are willing to share a debt.

The truth is, the financial tie is business, a joint venture. Mortgage payments are made using cash, not love. The mortgage lender doesn’t see the same loving relationship you do; they see an account number with two names attached. We will get to the lender shortly. The point we are making is that a financial commitment like this should be approached as a business venture.

For example

• We have children, and I want them to have security
• I want to profit from investing in the property in the future
• I don’t want to keep throwing money away by renting with no return

The first reason may seem emotionally driven, but it makes good business sense. Investing in a property now may financially benefit your children in the long run. It will also provide a roof over their heads while they grow.

It makes better business sense than, “We want to show our relationship is serious and we are committed to each other.” You must approach buying a property with your partner with a business hat on because that’s how the mortgage lender thinks.

• We have children, and we want them to have security
• I want to profit from investing in the property in the future
• I don’t want to keep throwing money away by renting with no return

The first reason may seem emotionally driven, but it makes good business sense. Investing in a property now may financially benefit your children in the long run. It will also provide a roof over their heads while they grow.

It makes better business sense than:

“We want to show that our relationship is serious and we are committed to each other.”

You must approach buying a property with your partner with a business hat on because that’s how the mortgage lender thinks.

Do you remember when we mentioned earlier that the lender sees an account number with two names attached? The mortgage lender expects the agreed payment every month to that account.

The mortgage lender is not interested in your Facebook relationship status; they just want the payment on time every month. If payment is not received, they will hold both parties responsible for the missed payment.

So, what happens if something goes wrong...

Your emotional relationship may have ended, but your business relationship remains intact.

If you have a 25-year mortgage and do not sell the property or at least your share, you could end up in a business relationship with someone you may not want to speak to again for over two decades.

It's important to remember that the lender is not interested in your emotional relationship. Their concern is the monthly payments only. Whether you speak to your ex-partner or not is irrelevant as long as one or both make the total monthly payment.

This part is crucial for you to understand. If your ex isn’t paying their share, using the example we mentioned earlier, a £1,000 monthly mortgage payment split 50/50, you may have to pay their share to avoid the possibility of losing the property.

Any missed or late payments affect both of your credit files, not just one person's.

If you both decide to sell the property and have been covering your ex’s missed payments, your ex will still be entitled to a share of the profits. Even though the property may have been repossessed had you not stepped in to cover the payments

Now, do you understand why this must be approached as a business deal? .

You might want to go ahead with the joint purchase; we are not trying to discourage you. We are just making sure you understand and approach the commitment correctly.

Like any relationship, assess who you are getting into bed with (pardon the pun). Here are some of the things to consider:

Does your partner overspend or has little regard for money? If your partner is a bit reckless with money, there’s a chance that you may have an issue with them paying their share of the mortgage.

Suppose you have a partner who constantly gets hounded about unpaid mobile phone bills or always has other bill arrears. You cannot expect there not to be an issue with a large outlay like a mortgage payment every month.

Is the debt excessive? Is your partner struggling with those payments? You should never consider adding more debt responsibility to someone who you can see is already finding it tough.

Don’t accept an answer like “It’s okay; I can manage £500 per month on a mortgage.” It needs to be clear that your partner can. Use our budget planner to see clearly what is affordable for both of you in black and white.

How long have they been employed? Is it full-time? If they are self-employed, how guaranteed is their income? You don’t want to get into a financial tie with someone who's always leaving or losing their job. It will put more pressure on you.

These are just some considerations before you take this big step. Take your time; there’s no rush. TRDG is always here in your corner.

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.