Week 1 – Buying a home with a partner The shape of the Irish family has changed drastically over the last 30 years, and in step with that, so has the Financial Planning needs of Irish people. In the coming weeks, IPF will take the various stages of family life and outline the key things to consider and plan for financially. Week One’s topic is; 1) Buying a home with a partner. Nowadays, many couples choose to purchase a property together as the first step in their life journey. Early on, we would urge you to speak to a good Mortgage Advisor even if your time frame is 12-18 months away. They can guide you on what you will need to do to get mortgage-ready and give you the best chance to get onto the property ladder. Things a good Mortgage Advisor will discuss with you at an initial consultation: Deposit you will needSpending/ Savings habits the bank like to see.How to manage current loans/ credit cards.Gifts from a loved one.What lender will be a fit for you?Cash back available at mortgage drawdown.Government grants that you may be able to use.Is a green mortgage an option?Are you building? The Mortgage Advisor will also give you an expectation of – The maximum you will be able to borrow – Your monthly mortgage repayments – Fixed or variable rate – which will work best for you? – Fees for your solicitor – The term of your mortgage – Home survey and typical cost – Home Insurance – Life Assurance requirement. Speaking of life assurance…. When you finally find yourself about to close, this is indeed an exciting time. However, one topic that might be ignored when finalising the purchase is what happens if one of the cohabitants dies. If not properly advised, many people will purchase a bog standard Mortgage Protection plan. This can be a risk. Why? In the eyes of the law, the couple are strangers. Even though they have purchased what is, for most people, the most significant purchase of their lives together, they can be liable to inheritance tax. This is an extremely vulnerable position to be in. If one partner dies, the surviving partner is only entitled under Revenue rules to €16,250 tax-free from their partner, and any balance is liable to 33% inheritance tax. This could be a frightful realisation at an already stressful time. So what should couples who are not married but buying a property together do to ensure this doesn’t happen? They can take out two single policies called ‘Life of Another’ assurance policies. Your IPF Mortgage Advisor can assist you with this when you are closing your home purchase or if you overlooked it when you did buy your current home with your partner. To speak to us for more information.
