The decision to purchase a home before or after the marriage has many mitigating factors, pros, and cons. It is best to do all the necessary research before making this decision.

Credit Scores

Credit score

Deciding to purchase a home with your significant other can hinge on finances.  Financial institutions usually consider married couples as one unit.  When unmarried, financial institutions look at each as individual applicants even though they are applying for a mortgage together.

Applying as a couple increases your chances of qualifying for a higher mortgage if both parties have good credit ratings.  However, if you both apply jointly and one has a poor credit history it can have the opposite effect.  Therefore if only one applies for the mortgage with a single income, the mortgage loan amount will be lower.

If a poor credit rating is the case, it might be a good idea to hold off buying a home until the person has time to improve their credit rating.

Savings

saving money

The ability to combine savings for a down payment and closing costs can greatly benefit the amount of the mortgage.  This would, in turn, reduce the amount of the monthly payments of the loan.  Contributing equally to the purchase of a home is optimum. However, if one significantly contributes more than the other, there should be some sort of written agreement put in place. This is protection in case there the relationship dissolves before marriage. It is a much easier way to fairly divide the equity that has been built up in the house.

Title of the Home

Taking the title of the home and property can make a difference legally because it will determine who takes ownership in the event of death. If you are not married, taking ownership and signing Tenants in Common, both parties will have ownership. However, in the event of the death of one of the parties, the deceased’s interest will be transferred to the estate unless it is otherwise stated in their will. Putting the title in  Joint Tenants; however, in the event of the death of one of the parties, the other party on the title would automatically receive the interests of the other.

Cohabitation Agreement

Many people think that during a split up, their partner would not turn nasty and unfair. However, this has proven not to be the case in many separations. One way, both parties would be protected is to enter into a Cohabitation agreement.  This should be done by a lawyer and can set out specific details that outline what would happen in the event of a split up.  Some partners may be offended that the other has requested to have this done. However, one never knows how the other person will react during a breakup. Some people may consider this a jinx, as they are putting into writing the details of breaking up before it happens. However, a Cohabitation agreement can also set out the terms of financial responsibility each will have while living in the home.

Commitment

The commitment of buying a home together whether married or not, bonds two people together.  It is one of the biggest steps towards a commitment to one another. The financial planning, choosing a realtor, and all the decisions that need to made when purchasing a home can be a very bonding adventure. The purchase of a home entails each partner, to be honest about their finances, short and long term goals, career commitments and family planning.  It proves to one another that their commitment to one another is serious and long term. Quite often, the commitment of purchasing a home leads to the commitment of marriage.  There is also the possibility of the opposite happening, especially if they have never lived together previously. The saying goes, You don’t know someone until you live with them.

Benefits of Being Married Before Purchasing a Home

being married

  • It can be much easier to purchase a home when you are married. Usually, all the financial issues are ascertained during the period of marriage. A wedding can significantly benefit the purchase of a home if generous monetary gifts are given. Affluent families often give their children the down payment for their first home as a wedding gift. This can give the couple a much better start to their life journey together.

 

  • Applying for a mortgage as a married couple is much easier, especially if both have good credit histories. The qualifying amount of the mortgage will be greater taking into consideration if both parties have regular, steady incomes.

 

  • Legally, it is much safer for both parties to purchase the home together as a married couple. Laws surrounding the matrimonial home in the event of separation, divorce, and death are very clear.

 

  • Most often married couples already have the sense of security and commitment with one another before purchasing a home.  It takes them that one step closer to embarking on a lifelong journey together.

 

  • Purchasing a home together is a great learning experience. Spouses can learn so much more about one another. They can learn what the important factors each on looking for in a home. A couple can learn where both would be most comfortable living. They can learn if one or the other is ambitious or not when it comes to possible renovations. They can decide on the size of family they would like if any.  Also, they can also learn how financially responsible each of them is.

 

So in the grand scheme of things, purchasing a home prior or after marriage is a huge decision that has to be made. There are pros and cons to both.  There are many legal differences surrounding both circumstances. Seeking legal advice before making your decision is a very good idea.  Sometimes a prenuptial agreement or a Cohabitation agreement may be recommended if one party significantly contributes financially more than the other.  Some may decide not to go that route and will choose to deal with things as they come.  It is a very personal choice.


Note: None of the information contained in this post is to be construed as legal advice. It is for information purposes only. It is advisable for any individual going through a separation to obtain legal independent advice.


Resources:

http://www.devrylaw.ca/buying-a-house-before-marriage/
http://homeownership.ca/dreaming-of-homeownership/when-is-the-right-time/are-you-ready-to-buy-a-house-together/
https://www.moneysense.ca/spend/real-estate/buying/discuss-a-break-up-before-buying-property-with-a-partner/
https://ca.finance.yahoo.com/blogs/insight/risk-buying-marrying-160824480.html