4 Questions to Ask When Buying Your First Home with Your Significant Other
Wednesday Feb 13th, 2019
In our last blog post, we discussed homeownership for singles and the many things one should keep in mind when buying a house on their own. But, what if you are partnered up with someone and ready to put your renting days behind you? We’re going to dive into this homeownership topic today.
More and more Canadians are choosing to prioritize homeownership over other life events, such as marriage, as a way to get into the housing market. With interest rates in flux and rents high, especially in major cities like Toronto and Mississauga, homeownership does have its appeal.
However, buying a home with a significant other does require some key considerations. Here are some questions to ask yourself (and one another) before embarking on your homeownership journey:
Have you seen your partner’s credit report and know about their debt obligations?
While purchasing a home is a wonderfully exciting moment in a couples’ life, it does come with its stresses – and finances can be one of them. To eliminate any surprises between you and your partner, be open about your outstanding debt obligations, income, living expenses and your credit score. In order to qualify for a mortgage, both you and your significant other will need to be financially fit. You’ll also want to feel comfortable discussing the topic of money on a regular basis, as it relates to homeownership.
Do you have a shared bank account? If not, would you consider the idea?
Owning a home comes with a slew of monthly financial obligations, including mortgage payments, insurance, property taxes, utilities, repairs and more. While it’s not mandatory, many couples opt to open a shared bank account, which both parties deposit an agreed upon amount each month to cover the cost of regular home-related expenditures. This is a great way to streamline your homeownership duties and ensure that payment obligations are met on time without added hassle.
Are you ready to sign a written agreement?
According to the Ministry of the Attorney General, common law couples can sign a cohabitation agreement to protect their rights. This document spells out what you both want your financial and family arrangements to be, and it can even state who owns the things you buy while you are living together. If you decide to split up, a cohabitation agreement can also cover how your property will be divided and who has to move out of the home if the relationship ends. For a cohabitation agreement to be legal, it must be signed in front of a witness and the witness must also sign the document. Once you have signed a cohabitation agreement, both you and your partner must follow what it outlines. If one of you decides to revise the agreement, you can negotiate a change, but it must be in writing and signed in front of a witness.
Do you have a will in place?
It’s also important to draft wills if you want your partner to inherit your shared home in the event that you pass away. In Ontario, blood relatives trump common law partners in the absence of a will. It’s best to consult with a lawyer to assist with the planning of the cohabitation agreement (if you choose to follow one), to determine how the property will be held on title, to assist with wills and any other estate or property planning that may be necessary.
While the above questions may be hard to ask, this process is a key step for any couple looking to merge their finances together (whether wholly or partially) to purchases one of the biggest investments of a lifetime – a home. Of course, having family support and trusted professionals alongside you while making these decisions is critical – whether it be your parents, a mortgage broker, lawyer or realtor.
To learn how I can help you navigate your homeownership journey with your partner, please feel to contact me, Deborah Clerk, Real Estate Sales Representative, ASA with Keller Williams Realty Solutions, Brokerage, in Mississauga, Ontario. I’d be happy to share more about my comprehensive home buying services and learn more about you, your significant other and your real estate needs.