Moving in with a partner who has a mortgage

It’s legally known as cohabitation when you move in with your partner but are not married. Cohabitating couples have specific rights, but these rights are different from married couples. Understanding these rights will help you and your partner better navigate moving in together, especially if one of you owns the property and has a mortgage on it. You’ll need to consider the legal rights of each partner, whether the lender needs to be informed and whether the ownership could change once cohabitating.

De facto and married couples are treated similarly under the Family Law Act. This means your cohabiting partner may be entitled to seek a division of assets, including the property, depending on the circumstances of your relationship. This could be the case if you’ve lived together as a couple for two or more years, you have children together, or the non-owning partner made significant contributions towards the property and it would be unjust if they were not allowed to make a claim. However, there’s no one-glove-fits-all approach to such cases and taking independent legal advice to resolve such situations is a wise thing to do.

A few other things that may impact whether a cohabiting partner has any claim on the property include a beneficial interest, cohabitation agreement and family law.

Beneficial interest

If the non-owning partner makes a financial contribution to the home or adds significant value, they have the right to continue living there. They’re also entitled to receive a share in the property’s sales proceeds.

Cohabitation agreement

A cohabitation or living together agreement is the best way to ensure both partners are clear on all matters. This includes property matters and covers children and other financial matters for unmarried couples.

Family law

If the non-owning partner is a legal guardian or parent to the children living in the house, family law allows them to continue residing in the property.

Informing your lender when your partner moves in is advisable. The lender may ask your partner to sign a form stating that they are aware of the mortgage and will not make a claim on the property in the future. This makes it easier for your lender to repossess the home if required due to you defaulting on repayments. Additionally, it protects your interest in the home.

If you want to become a joint owner after moving in with a partner who has a mortgage, you’ll need to become a joint mortgage holder. The lender has to agree to this, and they’ll need to be confident you can still continue to make the monthly repayments without any difficulty. There may also be some tax implications when you add a partner as a joint owner so getting the correct advice is important.

 While a cohabitation agreement can help set the correct financial and legal boundaries when one partner owns the property. It doesn’t solve all possible problems that may arise in the future. The agreement is based on trust laws, and you should ensure not to include any clauses that there is any risk you or your partner may not adhere to in the future. Both partners are best to seek independent advice before moving in together.