Are you and your partner ready to purchase a home together?

The soft launch is a sweet memory, you’ve met each other’s friends and family, and you’re ready for the next step. 

The thing is, investing your life savings and signing on the dotted line is a significantly larger commitment than going official on Instagram. 

So how do you know if it’s the right time, and how, exactly, do you manage all that paperwork? Here are a some things to consider:

Buying a home together – when is the right time?

It doesn’t matter if you’re 20 or 40 or older – there is no ‘right time’. 

What there is, are the right circumstances. 

For starters, think about why you’re looking to buy together. Is it because you feel like that’s the next step you should take? Or because friends and family are buying houses? 

The best motivation for buying a home together is because you want to, you are financially prepared to, and because you’ve had numerous in-depth discussions about finances. Ideally, you’ll both go into this agreement with a full understanding of exactly what your expectations are (of one another and of yourself), how you’ll resolve disagreements (before they arise), and what the plan B is should your relationship break down. 

Pro tip: Make these tough conversations at least a little bit fun with your favourite snacks. 

Key considerations for couples

One of the biggest reasons couples break up is disagreements over finances

“Finances are always one of the leading stressors in a relationship and this will only get worse with the cost of living crisis,” explains clinical psychologist Dougal Sutherland.

With that in mind, it’s hard to understate the importance of keeping clear communication open and being on the same page when it comes to managing a mortgage together.

It can also help to have spent a good amount of time living together, if you don’t already. We’ve already covered some of the questions you can chat through before making this move, but it might be a good idea to go over this list before buying together as well.

How to split payments if you do buy a home together

In a dream world, each partner would be able to contribute 50% of the down payment, and 50% on everything else.  

In reality, an even 50/50 split is rarely the case. One person might have a higher income, a student loan or other debt, more savings, or help from their parents. 

You will need to consider these key financial questions: 

  • How much of a deposit can you afford
  • How much debt you are willing to take on
  • How much you will each contribute to the down payment
  • How much you will each contribute to mortgage repayments and home insurance
  • How you will manage power and internet bills
  • How you will pay for household expenses such as whiteware and furniture
  • Whether you expect to make any renovations to the property and how they will be paid for

As always, it comes down to communicating. If one person puts more investment in, do they expect to have more say in the decision making? What would happen if the higher income earner lost their job? 

One option could be to average your incomes and make decisions based on that figure, but each relationship is unique. If you have these conversations and can’t agree, a financial advisor might be able to offer expert advice.  

Managing the process should you breakup 

Nobody gets married expecting to divorce, just as no one buys a home together expecting to have to one day fight over the chaise lounge. Sadly, it does happen often enough that it’s important to discuss this possibility as well. 

New Zealand property law states that if you have been in a relationship for three years (even if you’re not married) and a property is involved in the breakup, then you will split that asset equally. Even if one of you paid more for the deposit, and even if one of you paid more for the repayments, the property will be evenly split. 

That can mean selling the property and each taking half, or in some cases, one partner will pay the other for their half of the property. 

Alternatively, you could create a Cohabitation Agreement. This is like a pre-nup, but for non-married couples who live together. This could give you more control over how things will be split should you separate. 

Insurance for when life happens

When buying a property, home insurance is a must. It may also be beneficial to consider taking out life insurance. OneChoice offers cover to help with bills (such as a mortgage) should one partner be diagnosed with a terminal illness, or pass away. 

As much as buying a property can be an exciting step, knowing that you have some financial protection in place should something happen could help provide additional comfort. 

This article is provided for general information purposes only, does not consider your objectives, financial situation or needs and shouldn’t be considered or relied upon as professional or financial advice. If you have legal, tax, or financial questions, you should contact an appropriate professional.