With Valentine’s Day on the horizon, and the inevitable influx of proposals and engagements that come along with it, it’s worth knowing whether tying the knot has an impact when it comes to buying a new home. We asked some experts in-the-know for their take on marriage when it comes to mortgages.
The disadvantages of being married
The main difference between being married, rather than being in a non-married couple is that the majority of lenders will insist of both parties being on the application if you are married. In most cases, this is irrelevant but there are some incidences when you may get beneficial rates if just one party is named on the mortgage application and deeds.
“Often many couples (whether married or not) will seek to complete an application in a sole name. The reasons are broad, but some examples include adverse credit or high levels of debt for one applicant (and therefore more attractive rates would be achieved in a sole name), age – where one applicant’s age results in the mortgage being unaffordable due to maximum age at the end of term, and income – for example, if one applicant has just started in a self-employed role, we would be unable to use their income under one year of trading. Having them on the application with no income but with their existing commitments is likely to be detrimental,” says Tom Woodall of Prosperity Wealth.
Another reason for opting for a sole application, is for taxation purposes. “Where a couple are not married and one applicant has previously owned a property but the other is a first time buyer, the couple could benefit from first time buyer SDLT relief,” says Woodall. “However, this is not the case for a married couple – the reason being is a married couple are treated as ‘one unit’ by the HMRC and, subject to several conditions, the ‘first time buyer’ in the couple would lose their tax relief.” The same applies if one party already owns a property and is liable for the additional rate of stamp duty.
The advantages of being married
However, as ever, it’s a balancing act and there are some advantages to being married as well. “A minor pro is it can make you appear more stable and secure to a lender, but this is very minimal for the lender, not really a deciding factor,” says Matt Marsh, founder of RBM Solutions.
“We know from lender feedback that ‘joint’ applications will usually have a positive impact on the lender’s internal credit scoring system. Being married would further reinforce this and this is certainly feedback we receive from lenders,” says Woodall.
“The main pro is the idea of fairness and joint ownership that comes from both parties owning the property and being liable for the debt,” says Felicity Holloway, Head of Mortgages at Moneybox. “Being a married couple also makes things slightly easier when it comes to inheritance in the unfortunate circumstance of one person passing away.”
Other things to consider
In general, with the exception of a few niche cases, being married or not doesn’t make a huge difference when getting a mortgage but there are other things that do need to be thought about when you’re entering into a joint arrangement. “The main thing to be considered when buying as a couple is the ownership structure,” says Holloway. “Married or unmarried you still need to decide upon Joint Tenancy vs Tenants in Common. With joint tenancy you both own the property equally and this means if either of you die the other person automatically receives the other share. Tenants in common is slightly different in that each party owns a share each (can still be 50%) but if a party dies then their share follows their wishes in their will, which may not be to their spouse!”
You also need to remember that, even if only one of you pays the mortgages, should you split, it’s in both of your names. “Should the worst happen and there be a split, the FULL mortgage balance will still need to be met, paying your share only towards the payments will record the payment as missed and affect your credit profile. It is a joint liability so ensure it is fully met until you decide what you want to do with the property,” says Marsh.
There are arrangements that you can make when buying a house together that set out each party’s position should you split – something which might be required if there is a significant disparity between what each party pays towards the mortgage. “When buying jointly, another consideration is if either party is planning to make unequal contributions towards the monthly payments or to the deposit,” says Vikki Jefferies at PRIMIS Mortgage Network. “If so, a deed of trust should be drawn up with a solicitor. This document helps to set out what should happen in the event of selling the property or events such a relationship breakdown.”
While there aren’t many major advantages or disadvantages to being married as opposed to coupled up, it’s worth knowing that in some cases it can make a difference. As ever, it’s worth speaking to a mortgage broker for advice on your specific situation – especially if you fall into one of the scenarios where being married has an impact on your mortgage application.