Buying a Property With a Partner or Friend
There are many questions to ask when you and your partner are thinking about purchasing property together. What property can we afford with our budget? What if one of our credit scores isn't so great? These are just a few things that can be stressful in the process of finding a new home, and the fear of the answers to these questions can sometimes keep a couple from moving forward with a decision to own property at all.
The first thing that you must consider is your budget and how much you can afford to pay each month. You can calculate your debt-to-income ratio by adding all of your monthly debt and dividing it by your monthly income. If most of your income is eaten up by credit card debts, car payments or student loans, you may find it difficult to get an underwriter to approve your application.
In a business partnership the one with the most viable income could be the one owning most of the property. If after looking at your credit reports and you don't quite meet the requirements handed down by the lender, is your partner's credit going to help in that situation? If not, you might be setting yourself up for disappointment.
The best thing to do before you contact a mortgage lender is to request your credit reports. Low scores can reflect late payments or missed payments, large amounts of revolving credit debt or even bankruptcy. If these things are discovered on either of your credit reports, both of you have some planning to do to either pay off some of those debts or re-establish good credit. These things take time and can result in partners or couples deciding to give up on the process altogether.
If you've been pre-approved, you can move forward with finding a property you and your partner want to live or work in. How much can you afford when it comes to monthly payments? Are you going to escrow your taxes and insurance? Does the mortgage company require you to have mortgage insurance? These are all questions that need to be addressed before you commit to your dream home.
Even if the lender has pre-approved you for X amount doesn't mean you can afford the payments on that amount with all your other monthly payments (that aren't on your credit report). The process of purchasing and owning property jointly can be a lot of work and a lot of planning. Make sure you carry out thorough research before you start the application process.
Knowing each other's financials is the key to working together and paying down any debts owed that can contribute to that factor. If your partner owns a property, how much of that debt is yours versus theirs? Finally, making sure that each other's credit reports qualify to purchase the property. Many people submit applications without ever knowing the quality of their credit score, only to experience disappointment when their applications are rejected.
Explore more:
What are Conveyancing Searches?
Exchanging Contracts when Buying a House
Are you looking for an Independent Chartered Surveyor near Maidstone? Follow this link for homebuyer Surveys in Kent.