Nowadays, the tides have turned, and what was once a rare occurrence is quite the common phenomenon for young Canadians across the country. According to a study by Coldwell Banker, one-quarter of millennials bought property together before tying the knot. Across Canada, the reasons for this shift are clear – sky-high rent, low-rate mortgage, a red-hot real estate market and young people delaying nuptials all make homeownership before marriage an attractive option.
While buying a home pre-marriage is no longer the unheard-of practice it was once if you’re looking to purchase a home with your significant other before saying “I do,” it’s important to do your research and plan carefully. Here are a few questions to discuss before beginning the house hunt with your honey:
Do You Have a Home Buying Plan?
Before jumping into the nitty-gritty legal details, it’s a good idea to get on the same page about what you and your partner want from this process and come up with a plan of action.
You and your partner should come to an agreement about the important details of home ownership, including location, size, budget, down payment, etc. Decide on a real estate agent, and discuss with them all of your wants, needs and concerns when it comes to your ideal new home.
Use our complete house hunting checklist to help you get started, and make sure to discuss each point with your partner to ensure you’re both in agreement.
How Will You Hold the Title to Your New Home?
For those entering homeownership without a marriage under their belts, there are a few added things to think about when the time comes to figure out home purchase legalities, including how the title to the new home will be held.
The two most common ways to hold the title for unmarried couples are joint tenancy and tenancy in common:
Joint Tenants: In Joint Tenancy, each partner owns an equal share of the property. This means that if one party passes away, the title automatically transfers to the other party. This also means that both people have an equal, undivided interest in the property, and have an equal claim to the house.
Tenants in Common: Tenancy in Common means that both parties share possession of the home equally but may own a different percentage of the home. For example, one partner can hold 75 percent of the home while the other partner holds 25 percent. In this instance, if one tenant passes away, their share of the home gets passed along to their heir, whoever they designate this to be.
How You Will Split Costs?
So you’ve purchased a home with your partner – congratulations!
When you’re done celebrating, it’s time to sit down to talk with your partner about a few important homeownership topics, such as cost-splitting. Have a discussion with your significant other about how you would like to split the costs on your new home, including mortgage payments, bills, taxes, groceries etc.
Are you both keen on a 50/50 cost split, where each partner pays half of the mortgage, bills and other expenses? Or would you prefer that one partner pays the mortgage while the other partner takes care of the bills?
If one partner’s salary is higher than the other’s, would you agree to have them paying a smaller portion of costs? Having this important discussion early in the process helps keep misunderstandings to a minimum when bills and expenses start piling up after your home purchase is complete.
Will You Draw Up a “What If” Document?
Although relationships start out with the best of intentions, sometimes couples decide to go their separate ways.
While it’s not pleasant to think about, experts advise unmarried couples to draw up a legal document detailing the “what ifs” – including a plan of action in the event of a break-up. That’s why it’s a wise idea to put an agreement into writing, with the help of a real estate lawyer, where you decide what will happen if you and your partner decide to part ways.
For example, if a break-up occurs, would you want the ability to buy each other out? And what happens if you both want the house? Have a real estate lawyer help create your agreement detailing all the “what ifs” that could occur.
Final Thoughts
Buying a home before marriage is not without its risks – but so is buying a home after marriage, marriage itself, and most other big life choices. The good news is that with the right research, planning, and knowledge, you can minimize your risk and get back to what’s important – enjoying your new home with your special someone.
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These tips are provided for information and prevention purposes only. They are general in nature, and Desjardins Insurance cannot be held liable for them. We recommend using caution and consulting an expert for comprehensive, tailored advice.
In Quebec, Desjardins Insurance refers to Desjardins General Insurance Inc. In Ontario and Alberta, Desjardins Insurance refers to Certas Direct Insurance Company, underwriter of automobile and property insurance.
