Buying a house when you’re unmarried

When it comes to getting a home loan and buying property in Australia, there is usually no real difference between a married couple and a couple in a de facto relationship. That said, it’s still worth considering whether buying property when you’re unmarried is the best choice for your personal finances and your relationship.

What’s the difference between a marriage and a de facto relationship in Australia? 

As well as having cultural and religious significance, a marriage is a legally recognised relationship between two people that’s been registered with the government. In Australia, when two people choose to live together without getting married, they may still be legally recognised as being in a de facto relationship, with many of the same rights and responsibilities.

The exact legal definition of what constitutes a de facto relationship in Australia may vary for different situations, such as immigration, or accessing government services. For the purposes of applying for a home loan, generally all a couple needs to have their relationship recognised is to live together.

How can an unmarried couple get a home loan? 

Married and unmarried couples can jointly apply for home loans in Australia. This can often make purchasing property simpler, as a couple can use two incomes rather than one to service the repayments.

The two common methods for doing so are: 

• As joint tenants, where both partners are considered co-owners of the property
• As tenants in common, where ownership of the property is split between the partners in a predetermined ratio, such as 50/50 or 70/30.

In a joint mortgage, both partners are equally responsible for the mortgage and its repayments. If one partner passes away, the other partner will automatically become the owner of the property. If the couple splits up or divorces, ownership of the property will be divided between them along with their other assets.

Tenants in common are responsible for the payment and upkeep of the mortgage according to their ownership split – for example, in a 70/30 split mortgage, one partner will be responsible for paying 70 per cent of the repayment amount, while the other will be responsible for 30 per cent.

It’s also possible for one tenant in common to purchase the other’s share to become the sole owner of the property, or for one partner to sell their share to a third party. If one partner passes away, their share does not automatically transfer to their partner as in the case of a joint mortgage, but instead will be dealt with according to their will. In a separation or divorce, the percentage ownership of the property will be considered among the couple’s other assets when determining a fair split.

Should an unmarried couple get a home loan? 

The decision to apply for a home loan and purchase property as a couple is a significant one that deserves careful consideration. The best decision for you and your partner will always depend on your personal goals and financial situation.

While a bank may recognise a couple as being in a de facto relationship if they’re living together, this may not always be enough to estimate whether a relationship is likely to be stable and long-lasting. On the other hand, the 2021 census shows that more than 1.8 million people in Australia are divorced and over 600,000 are separated, so a wedding may not guarantee a stable relationship either.

Unmarried couples choosing to purchase property together could choose an ownership that best suits their situation. They could also enter into a financial agreement at any time during their relationship, which works similarly to a prenuptial agreement and lays out how they plan to split their finances if their relationship breaks down, which may provide certain legal protections.

The best decisions for married and unmarried couples may vary based on a wide range of financial, legal and personal factors. Consider talking to a legal professional, a mortgage broker, and yes, your spouse about your plans to get a mortgage before making a new commitment.

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