This may not be something you’ve considered, but how you would like to own your home (legally) is an important consideration.
Your conveyancing solicitor will speak with you about your options. In the meantime, here is a guide to get you started.
If you are buying alone, you own the property in your name only. Simple.
Joint Tenants have equal rights to the property regardless of how much each person is paying or what their deposit contributions are.
This means that in the event of the death of one owner, the property is automatically assigned to the surviving owner. You cannot pass on your ownership stake in your will.
Joint tenants are sometimes called beneficial joint tenants.
Tenants in Common
As tenants in common, you can own different shares of the property.
In the event of the death of one owner, their share gets assigned according to their will. The property doesn’t automatically go to the other owners.
When Tenants in Common own different shares of the property, these can be fixed or dynamic.
Fixed ownership means that regardless of who pays what, your ownership shares are defined from day one and don't change.
Dynamic ownership means that your ownership shares are dependent on what you put towards mortgage repayments.
Jack and Liv are buying a flat together.
Jack is contributing £10,000 towards the deposit and Liv is contributing £30,000.
Their monthly mortgage payments will be £1,200.
They decide that Jack will pay £500 towards the mortgage each month, and Liv will pay £700.
Option 1: Fixed shares
With fixed ownership, they can decide that each time they make a mortgage repayment, Jack gains 30% of the payment and Liv gains 70%.
Option 2: Dynamic shares
With dynamic ownership, they can decide that their shares will be based upon what each of them have paid in. This also enables them to change who is contributing what towards mortgage repayments.
So Jack can start off paying £300 and Jill paying £900. But then they could switch to Jack paying £600 and Jill paying £600. Their ownership shares would dynamically reflect what they've each contributed.
Please note that to track your individual shares dynamically, you will need to pay from separate personal accounts. This is to ensure that your group's payment history and contributions are crystal clear.
What does this mean if I have an Income Booster?
If you have an Income Booster on your mortgage, they can contribute towards the mortgage payments now or in the future.
If they do make contributions, and would like to gain equity, a Generation Home Agreement will need to be signed.
If they do make contributions, but would rather give the shares to the owners, there is no need for a Generation Home Agreement.
If you think that dynamic ownership would suit your buying group, we will draw up a Generation Home Agreement for you, free of charge. This is then shared with your conveyancing solicitor for them to review with you.
The Generation Home Agreement is a legally binding document that allows your ownership shares to legally reflect who has contributed what financially.
Want to learn more about the Generation Home Agreement? Please click here.