It can be one of the most exciting times in life when you, as a young couple, buy your first home together. You’ve worked hard to save a deposit, you now earn enough to borrow the money you need to secure a mortgage, you think you may have found ‘the one’ and just want to put down some roots and get on the first rung of that ever-elusive housing ladder.

Marriage isn’t really on the cards yet, after all you’re still quite young, but buying a home together is a good start and will hopefully be the building bricks for your future together.

You’ve found the perfect flat, your offer is accepted and so you apply for a mortgage and contact your solicitor to ask them to go ahead with all the legal stuff. You are given your completion date and the countdown begins…

It’s a heady and exciting time, filled with discussions of which paint colour will match those cushions and do we really need a wine fridge? No one really wants to bring things down by talking about money and what might happen if, god forbid, anything might turn sour in a few years’ time. 

However now is exactly the time to consider the legal implications of making the biggest purchase you have ever made.

Your deposit will probably be made up of money saved or given to each of you and then pooled together to buy the flat. This will most likely not be in equal shares and so it is important to consider who will get what if you go your separate ways and have to sell your lovely home.

An equity agreement can help you here. It is an agreement which sets out how the proceeds of sale of a property will be shared if the property is sold. The agreement will also detail the mechanics of how a sale price is agreed on and timescales for each person to work within to make sure neither person drags their heels or refuses to co-operate.

For example, if Sheila contributes £50,000 to the deposit and Bob contributes £10,000, it is reasonable for Sheila to expect to get her larger deposit back if the property is sold, rather than sharing the sale proceeds 50/50 with Bob. If there is no equity agreement then the sale proceeds would usually be split equally, but with an agreement in place a fairer outcome can be arranged.

Of course, everybody’s circumstances are different. One of you may have residential qualifications allowing you to buy, but the other does not. In that case an equity agreement can protect a contribution made by a non-qualified partner as well as providing arrangements to transfer the property into joint ownership as soon as that is permissible.

So, when buying your first home, do get swept away with the excitement of it, but also remember to discuss an equity agreement with your solicitor before you sign on the dotted line and protect all of that money you have worked so hard to save.

Abigail would be happy to talk you through your co-habitation agreements. Please call 875875 to make an appointment.