It is a legal document to protect everyone's financial interests when you're buying, owning and selling together.
What is a deed of trust?
A deed of trust is something you’ll come across when you’re buying a property with someone else, or with the support of someone else.
It’s a legal document, sometimes referred to as a declaration of trust, which records the financial arrangements between everyone who has a financial interest in the property.
Why is it important to consider the legal side of things?
Buying a home is likely the biggest financial commitment of your life.
If you’re buying with a partner, family or friend, you are unlikely to be contributing identical amounts to the deposit. You may not be contributing the same amount to your monthly mortgage payments either.
It's a good idea to put down in a legal document who gets what when the house is sold or someone wants to be bought out. By setting out how much each person has put in and what should happen in any eventuality, you should (hopefully) avoid disagreements in the future.
Everyone's initial ownership in the property is marked at the outset (who owns what). When it comes time to sell, the deed of trust determines how sale proceeds are distributed.
What makes the Generation Home Agreement different?
If you like the idea of having individual shares in the property (tenants in common), Generation Home offers a unique feature.
Your individual shares in the property can reflect your individual contributions towards the deposit and mortgage repayments. This ownership structure doesn't have to be fixed, but can dynamically change over time.
Your financial situation may change, who pays what towards the mortgage may change, and you can have your ownership change in line with this.
If you're buying as a group, the Generation Home Agreement allows you to maintain individual ownership shares.
How do you track who pays what and, therefore, who owns what?
To track who has paid what, we require that everyone set up a Direct Debit so that they're paying from their personal bank account (rather than a joint account).
Making individual payments makes it clear who has contributed what, avoiding potential disputes in the future or the need for complicated spreadsheets.
How much will this cost?
The legal and accounting structure is free for Generation Home customers.
What does this mean for Income Boosters?
If you have an Income Booster on your mortgage they are able to contribute to the mortgage payments now or in the future.
If they do make contributions, and would like to gain equity, rather than gifting the payments to the owners, a Generation Home Agreement will need to be signed.
Can I repay my Income Booster?
Yes. If your Income Booster makes payments towards your mortgage, you can pay them back and reduce their equity stake in the property.
If the Booster wishes, they can gift some or all of their equity stake to the owners of the property.
Speak with a member of the Generation Home team to learn more. Remember that your solicitor is there to advise you on your most suitable ownership structure.
To read more about the different ways that you can own your home, click here.