I would please like to know the best type of home loan for a couple, where one partner has children from a previous marriage, especially if the partner without the children is putting in the deposit. Is it best to set up "Tenants in Common" or "Joint Tenancy".
Could you also give me the advantages of "Tennants in Common" and the disadvantages of "Joint tenancy" (and if there are any advantages in Joint tenancy?)
Claire you can have what we call a property share, that is although it is overall at what the deposit is put.For Example Partner with no child is putting 20%, there should then be two separate loans should be taken. One for 50% for Partner with Child from Previous children, and One loan for 30% adding to 80% loan..
Its important, that you have tenants in common,with different percentage of owner ship. i.e. 50% 50% upon selling profit is distributed after you have paid out individual loans, which will bring back the deposit more into the hands of the person who put it.
Joint Tenancy is a 50/50 , so no matter who put the deposit, you will get a equal share after loans, Therefore part of your 20% equity gets moved to the other person share. The downturn in the market is equally shared, however you will and you are going to be guarantors to each others loan in Tenants in Common,where as in Joint Tenancy you are jointly liable. your deposit goes in and you get one loan in the Joint Tenancy.
Either way if you buy a property jointly in either situation, you will always remain
liable in both cases, but I see more advantage in Tenants in Common. What you put in remains yours visibly.
Happy to discuss
the best answer for you is "its complicated!!!"
there is no single answer that is best for you. The best setup for you depends on a multitude of factors:
- each persons objectives
- is this the "forever home"??
- is it likely to become income-producing at some point?
- what do you want to do with your share when you pass away?
- what does your partner what to do with his share when he passes away?
- how old are the children?
- what is your expectation regarding your share of any joint assets in the event that one or the other or both of you pass away suddenly
- what is going to happen with the children in the event that your new partner passes away and leaves the kids with you? or the children go to someone else??
best thing you can do is get in front of someone who can advise you on a range of things. BOTH of you. So you are all on the same page with what is going on what the issues are and how to address things sensibly.