Buying a home with your partner? Here’s what to make agreements about first

When you buy a house, there’s a lot to consider. Are you buying the house together or is just one of you buying it? If you’re buying it together, you can own it 50/50, or you might decide to split it another way. 

• If you and your partner are not married and you buy the property without equal ownership, i.e. not 50/50, you should bear the following in mind for in case you do get married in the future. Without a prenuptial agreement, the home will become part of the marital assets under the Dutch community of property regime. Marital assets are always split 50/50 between you, even if ownership of the property was split differently before you got married, for example 70/30. Read more about this in our article ‘How getting married affects your assets’.
• Will you be contributing your own funds? If so, it’s important to determine how much you’ll be contributing and how much you’ll borrow. If you contribute your own funds, the question arises as to whether these are joint funds or your own personal funds. And in the latter case, how will that affect things? It’s good to make clear agreements with each other about this.
• If you’re going to borrow money as a couple, there are yet more questions to be answered. For instance, will you be borrowing from the bank or from family? Will you be taking out the loan jointly? It’s also important to consider how the loan will subsequently be repaid. Will you repay it all in one go at the end of the term, using an endowment insurance payout, for example, or through monthly repayments? In either case, you’ll need to consider how your premiums or repayments are covered: from a joint account or separate ones?

And then there are other matters like paying interest, tax deduction on the interest and increases or decreases in the value of the property.

When people want to buy a house, they usually focus first on finding the right place for them. Next, they think about whether they can get the financing, and last but not least, about furnishing the property. That’s all understandable, but the financial decisions outlined above are often overlooked in the process. If you were to get divorced, this could lead to disputes that often end up having to be settled in court.

Case law covers almost every conceivable variation. For instance, situations where the property is in one partner’s name and the mortgage is in both partners’ names, or vice versa. Or where the endowment insurance is held in one partner’s name, but the premiums are paid out of the other partner’s income. You can avoid such situations by considering the financial implications in advance. Simply ask yourself ‘How will our finances be divided in 10 years’ time?’

In many cases, one of the partners already has a home and the other partner moves in with them. This may start out on a trial basis before growing into a more long-term arrangement. Again, the pitfall here is forgetting to make solid agreements beforehand. This can cause friction if the partner who has moved in spends a lot of time renovating the house.

Is that partner entitled to some of the equity this creates? This could get even more complicated if the mortgage interest and repayments come out of the joint account, which that same partner pays into.

Gifts for purchasing a home

What if one of you receives money as a gift to purchase a home or pay off a joint mortgage? Read more about this in our ‘Gift for purchasing a home’ article.

In a nutshell, make sure you have made solid agreements in place that work for you both when it comes to the financial consequences of buying a home together or moving in with your partner. Some agreements can be recorded in a prenuptial agreement or in a cohabitation agreement. You can make other agreements outside the scope of these documents.