9 Tips for couples on buying a property before the wedding
It is not rare to find couples who want to or did buy a house before the wedding, especially in the metro cities of the country. However, Just like any other financial decision, buying a home brings with it many different issues which the couple should understand and plan well before. Any couple buying a house should understand that the task which is completed cannot be undone merely, but in case of an unmarried couple, there are few more things to consider. However, all being said if done smartly, there is nothing that can stop an unmarried couple from buying a house and enjoying the fact of being a homeowner.
To make this process of buying and owning a house as smooth as possible for an unmarried couple we are giving nine essential tips.
Location and Price:
Before going ahead with anything, you should seriously consider whether to buy or lease a house. Once you are clear and have decided to buy a house, the first thing to decide is the location of the house and your price range. Many things should be considered before settling on the location, availability of affordable home is the most crucial factor. Other factors like connectivity, medical facilities, education institutes, markets, and other general amnesties should always be considered. Some of these may not affect you directly, but they determine the future appreciation of the value of the property. In case both the partners are working distance to their offices also plays a vital role in the selection of location.
Consult the Bank:
Even if you have ample saving, we would not suggest putting your entire saving in property, because emergencies do happen and you should always have some money saved for them. Herein comes the bank, choose the bank which can offer the lowest interest rates and good services. You should discuss with the bank about your credit scores, who should hold the title and what benefits, if any, are there for making the female as the primary borrower. The repayment plan, documents required in case you avail the loan, the separate liability of both partner and their combined liability should be discussed with the bank.
If you decide to go for a loan to buy a house, which is usually the case, your credit scores will play a significant role. The bank will inform both of you about your credit scores and the minimum score required to avail the loan. In the case where one or both of you have a low credit score, you have to determine whether it is a mistake or you have a low score. If it is not a mistake find out whether it is easy to increase this score somehow or to take the loan on the name of a partner having a good score.
Clear up the legal aspects:
The law treats any unmarried couple as two separate individuals, so apart from discussing with the bank how will they go ahead with this, you should also decide upon various other legal issues. This includes the question of whose name will be on the title of the property, which will pay the EMIs and in what ratio, who will handle the maintenance and utility bills later. What will happen if one the partner dies or decide to get out of this arrangement?
Joint saving account:
You are together; you are buying a property together in this situation there will be numerous financial activities which will affect you both and which you will have to handle as a couple. A joint saving account will make these transactions quite easy; also it will help you separate your financial activities and the financial activities of the couple. The joint saving account can also be used to pay EMIs and utility bills like electricity, water, and house tax.
Although we mentioned it earlier, this is such a crucial thing that it needs separate attention. Just dividing the EMI in equal ratio might not be possible in every scenario. The monthly earning of each partner will decide their payment capability. Both the partners should discuss and decide the amount of EMI they can and should pay, a simple way to divide EMI in such a way that each partner pays an equal percentage of their earnings. Whatever you may decide it should be acceptable to both the partner and should not be a burden on any one of them.
You are both liable:
Two people who are together are bound to disagree on some things; these arguments are bound to give rise to arguments and sometimes fight. In these situations remember you cannot use your portion of EMI as a hostage to win over the argument. You are both responsible for making a regular payment, and the bank does not care which partner was right in the argument or which partner paid on time, you are both liable for any late or irregular payment of EMI.
What happens if you split up?
I know it does not sound right to discuss this when things are going so great, you are buying a house together you are happy, why even consider a breakup. Until you get married, you are just two individuals who purchased a property together, and you have a liability towards the bank for payment of a loan. Many questions will cause trouble if you break up if one of you wants to sell and others want to keep the house. What if one partner wants to buy it off from other partner but the second partner have a better offer from someone else? These and many other issues should be discussed and finalized beforehand because if not, these will cause some significant legal troubles for both of you.
Put it in writing:
We have discussed many things which you should consider and decide together and before buying the house. The most important part is putting these agreed-upon decisions in writing and draft a binding agreement. I know it seems a waste of resources and useless to draft and sign a contract, after all, it’s only you two, but what will happen if things go wrong and the other person refuses to acknowledge and accept the previous arrangement. The written agreement will not only make things easy but will also protect the individual interest of both partners.