Splitting the Mortgage

With the pressure increasing for partnership rights, it's time we considered our property position when splitting up.

What are the options for unmarried gay couples when living together? And what would the picture be like, if we were married?

Present

Both male and female couples, tend to exercise caution, when considering their living arrangements. With so many different relationship models, we tend to be a little more cautious when making commitments. Lesbian and Gay couples should consider making their arrangements official, when moving in or buying property together.

Separate

Separate properties and living apart is a common option amongst Lesbian and Gay relationships, especially in the early years. This provides little or no complications, as each partner is responsible for their own affairs.

Many keep separate properties, living in one and renting the other. This gives the option for living apart, without hassle. Having a second property can be a useful investment for the future.

Co-Habitation Agreement

Upon moving in together it's a good idea to draw up a document that reflects the views of each party. Such agreements carry sections headed: Division of Proceeds, Ownership of Home and Common Expenses.

They give clarity, should the arrangement fall apart and make clear the rights that each party has. This is a wise move especially if one party owns the property and the other is going to be contributing to the bills.

Buying Together

After living together for a while, gay couples may then take the step of buying a home together. Many move out of the existing property and buy a fresh new place. Couples should consider holding onto the previous property as an investment, before selling it.
It may be possible to refinance the current place, on a buy to let mortgage. This could provide the deposit for the next place.

If the parties involved are bringing uneven resources to the deal, then documents need to be drawn to reflect the wishes of each party. For example, if one is contributing a larger amount of deposit than the other, this may need to be placed in writing.

It needs to be decided if this is separate to the percentage each owns of the property. If the extra deposit amount entitles the owner a larger share of the property, this also needs to be recorded.

The deposit may not be the only thing that's unequal. What if salaries are uneven? One party may end up paying a higher proportion of the mortgage payment. It needs to be decided if this means that one owns a higher proportion of the property value.

These are individual choices, between the individuals and there is no right and wrong answer. The form that should be used for these purposes is available from any legal stationer and carries the code F217. (Co-Habitation Agreement).

Future

If gay marriage and partnership rights become a reality, the importance of these documents will be reinforced. We won't know the exact rights gay couples will be granted, but lets take a moment to look at the current 'straight' position.

Currently if a married straight couple break up and divorce, the property and the outstanding mortgage will be taken as part of a divorce settlement. (Along with other assets).

Even if the wish is to separate the mortgage and remaining equity, the bank may not allow this, especially if one party has very little income. Also, both parties are going to need to agree for this all to happen.

If this places one party in a weak position, they may not be willing to offer their consent to such an arrangement. This could result with each or both parties, stuck in agreements that they'd rather not honour.

Mortgage lenders are waking up to the idea that they should take into account maintenance and contracted payment. This might not seem relevant to many gay couples right now, but wait a few years—the increase of gay parenting will see these issues rising up the agenda.

When partnership rights are granted we should be using a Co-Habitation Agreement as a matter of course, no matter how well we think we know each other. This is the sensible approach and protects each party, should things turn ugly.

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