Somewhere in the conveyancing there is a question about how you wish to hold the property. It is often presented as a tick box and it is not one. It decides what happens to your share of the house if you pass away, and whether unequal deposits are recognised at all.
The two ways to hold it
Joint tenants
You own the whole property together, with no defined shares. If one of you passes away, the other automatically owns all of it — this happens outside the will, and a will saying otherwise does not change it. It is the usual choice for married couples and civil partners with no children from earlier relationships.
Tenants in common
You each own a defined share, which can be unequal. Your share passes under your will, to whoever you name. It is the usual choice where the deposits were very different, where there are children from a previous relationship, or where you are buying with a friend or a sibling.
A declaration of trust
If you hold as tenants in common, a short document recording the shares and what happens on a sale is worth having. The conveyancer draws it up at the time, and it is a great deal cheaper than an argument later.
You can change it later
Moving between the two is possible, though the position at the moment of a death is what counts. It is easier to get right at the outset than to remember to change.
The mortgage side of it
- •Both of you are jointly and severally liable for the whole mortgage, whatever your shares are. If one stops paying, the lender looks to the other for all of it, not half.
- •Both credit files are assessed. One applicant’s adverse credit affects the lending available to both.
- •If one of you has owned before, first-time buyer stamp duty relief is not available on the purchase, even for the one who has not.
- •You can borrow as a couple and own in defined shares. The mortgage and the ownership are separate questions.
Family helping out
- 01A gifted deposit
Money given outright, with the giver confirming in writing that it is a gift, that no repayment is expected, and that they take no interest in the property. Simple, common, and the most-used route.
- 02Joint borrower, sole proprietor
A parent’s income supports the borrowing but they are not an owner and are not on the deeds. It keeps them clear of the additional property surcharge, which they would otherwise trigger. Not every lender offers it.
- 03A loan rather than a gift
If family money is genuinely a loan, say so. A lender will treat it as a commitment and it changes the affordability figure. Presenting a loan as a gift to get an application through is a false declaration, and nobody should be helping you do it.
- 04Buying together outright
A parent on the mortgage and on the deeds. It works, but it generally means the additional property surcharge on the whole purchase price, so the cost of it wants to be understood before rather than after.
One conversation worth having: what happens if one of you wants to sell and the other does not. Agreeing it while everybody is happy takes ten minutes. Agreeing it afterwards takes solicitors.