Welcome to Money Matters: GLAMOUR’s weekly dive into the world of finance. We’re chatting all things personal finance, from contracting rights in the workplace to expert mortgage advice and saving for your first home, to ISAs and dealing with debt, to help empower you to make better choices. Now more than ever, it's important to understand our money, but so many of us feel as if we don't have a handle on it – or worse, feel anxious and scared about money.
So, each week, a woman in a unique situation will give us an honest breakdown of her finances, and our expert will give her easy tips on how to tackle it.
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MY ACCOUNTS
Current account: £12,000
Savings account: £80,000
MY INCOMINGS
Annual salary pre-tax: £85,000
Annual salary post-tax: £65,000
Monthly wage pre-tax: £7,000
Monthly wage post-tax: £5,416
Other incoming payments: £2,000
MY OUTGOINGS
Rent/mortgage: £2,500
Bills: £300
Splurges: £0
Other: £200
Any student loans/credit cards/overdrafts: None
MY MONEY THOUGHTS
My worst money habit: Spending it too freely.
My biggest money worry: That I will lose it.
My financial hopes for the future: To pass down money to my future children.
Current money mood (three emojis which sum up your feelings towards money): 🏠💰😟
WHAT MONEY EXPERT MAKALA GREEN SAYS:
Makala Green is a multi-award-winning Chartered Financial Adviser at Schroders Personal Wealth and has over 18 years of experience in the financial industry. She understands managing money can be complicated and confusing, which is why she is passionate about making financial planning more accessible for all. She is also the Author of The Money Edit; a no shame no blame guide to taking control of your money.
Property ownership options
Buying a home is a significant milestone; doing it with a partner can be exciting and daunting. When buying a home with a partner, it's crucial to understand the two main types of joint ownership: Joint Tenants and Tenants in Common.
Joint Tenants means both partners own the entire property together. If one partner can't pay or passes away, the other is responsible for the full share. This arrangement is common among married couples or those living together.
The alternative option is Tenants in Common, which allows each partner to own a specified share of the property, which can be equal or unequal. For example, you can have a 50/50 or a 60/40 split. This option offers flexibility, as each partner can pass on their share to a beneficiary of their choice in their will instead of automatically going to the other owner. It can also provide a fair option if one person contributes a higher deposit.
Dealing with unequal property deposits
It's not uncommon for one partner to invest more financially in the property than the other. In such cases, drawing up a 'Declaration of Trust' or 'Trust Deed' is an option to discuss with a suitably qualified legal professional. This legal document clarifies each person's financial contribution and how the proceeds may be divided if the property is sold.
When taking out a joint mortgage, both parties are equally responsible for the mortgage payments, regardless of individual earnings or contributions. So, it's vital to have honest, open discussions about each person's finances and ensure both parties are comfortable with the commitment.
I need respite from the overwhelming pressure of living up to ‘city life’, and deciding to move back to Wales felt like finally acknowledging where I’d been mentally stuck for the past two years.
Looking ahead to the future
Life can bring unexpected twists and turns. It's a good idea to think about different scenarios when buying a property, like what would happen if one person wants to sell their share or the relationship ends. Buying a home together involves not just money but emotions, too. It's crucial to have open and honest conversations about each person's expectations and concerns. You can create a 'Cohabitation Agreement' if you're not married and living together. This agreement can outline what would happen in case of a breakup and provide more clarity and protection for both of you. It's a good idea to seek legal advice to understand your rights, which may differ from those of married couples.
Protection for you and your home
It's crucial to remember to budget for more than just the mortgage! You should also plan for other expenses like stamp duty, solicitor fees, survey costs, and potential repairs or renovations. Having a savings plan for these costs is a good idea to avoid any financial stress later on. In addition, consider further protection, such as life insurance and critical illness policies, to cover the mortgage if something happens to you or your partner. Also, income protection in case you can't work due to an accident or illness. Lastly, make sure your home is protected with adequate home insurance.
Seek support
Buying a home with a partner is a journey that requires careful consideration of legal, financial, and emotional factors. Understanding the different types of options, preparing for unequal financial contributions, and planning for future scenarios are essential steps in this process. Also, what is right for one person will be different to another as it all depends on your own personal circumstances.
Finally, don't hesitate to seek guidance from legal experts and mortgage and property professionals. Their expertise can be invaluable in navigating the complexities of buying a home with a partner.
This article is for information purposes only. It is not intended as advice.
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.
The terms used in this article apply to England only and may be different in Scotland or Wales.
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