Life changes, part 1: moving in together

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Buying a home together is a major step in any relationship. In addition to the adjustments you’ll be making in your living situation, there will be big financial changes. In part one of this three part series on life changes, we look at the steps you’ll need to take before getting a home loan with the person you love and what a mortgage broker can do to assist you.

1. Start a conversation about your finances 

You may have been living with your partner prior to purchasing your first property, but taking out a mortgage together makes things more serious financially. It’s not just rent and bills you’ll be splitting, but a whole bunch of fees, a home loan deposit and mortgage repayments for years to come.

It’s a good idea to sit down together and have a frank discussion about how much you can each afford to pitch in. Questions you’ll need to consider are: How much can you afford to borrow? Do you have outstanding debts? Will you be splitting everything evenly, or will one partner be shouldering more of the costs?

Having an open discussion about how much you will each contribute is a vital step towards taking out a joint home loan. Having an open discussion about how much you will each contribute is a vital step towards taking out a joint home loan.

One of the good things about taking out a home loan with your partner is that your borrowing power goes up. With the proportion of household income required for a 20 per cent home loan deposit having increasing dramatically in recent years, as research by CoreLogic indicates, it’s definitely easier when you combine two incomes. Additionally, those pesky mortgage application fees and stamp duty costs will be a lot more manageable. However, it’s important to be clear about how these costs will be divided in case disagreements arise later.

2. Decide which mortgage arrangement is best for you

After you’ve discussed your finances, it’s time to get into the practical arrangements. You can place the title in both your names (known as joint tenancy), which means you will jointly own the whole property. Alternatively, you can opt for a more flexible tenancy in common arrangement. When you’re tenants in common, you can sell your share of the home in the event that you and your partner divorce or your spouse passes away.

This is something that should be discussed with a legal professional, who can advise you on the option that’s most suitable for you.

Talking about your finances openly is the first step towards setting up a joint mortgage.Before going to a mortgage broker, you need to make sure you’ve had some open discussions about your finances. 

3. Draw up a budget

Signing up for a joint mortgage is not the same as buying a pet or even a car together. Your home will become your largest financial asset and if anything changes down the track that could affect your ability to meet mortgage repayments, you could find yourselves in the deep end. Establishing a combined budget is essential to ensure that this doesn’t happen. You can use our budget planning calculator to get yours off the ground.

4. Consult a mortgage broker

Once you’ve gone through these steps, it’s time to find a suitable home loan. A mortgage broker can help by sitting down with you and discussing options offered by different banks and lenders. We take into account your unique situation and handle all the negotiations and paperwork on your behalf.

Feel free to come to us before going through the previous steps. However, it does help a great deal if you and your partner have had a discussion beforehand. We’ll have a lot more to work with if you already have an idea of where you stand financially as a couple.

You can contact a Smartline Mortgage Adviser on 13 14 97 for mortgage advice. Or complete our call request form and we’ll call you!

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