The Reality of Mortgage before Marriage

Which is applicable for you?

1) “First come love, then comes marriage, then comes mortgage and then the baby”.

2) “First comes love, then comes mortgage, then comes marriage and then the baby”.

3) “First comes love, then comes a baby, then comes marriage and then the mortgage”

I am in this sequence (2). In our parents time, sequence (1) is more likely but it is just getting rarer now. Anybody who has experience sequence (3) – well, just to acknowledge that it is also not uncommon nowadays!

Anyway, I digress. The gist of the matter is that it is just feasible (and convenient?) for metropolitan couples nowadays to be homeowners first before saying “YES, I DO”. With tougher economic conditions and skyrocketing prices of new homes, many of “My Generasi” are taking a financial leap of faith by buying a marriage home first before even planning the wedding. Both are obviously huge hits to one’s savings, but it is very normal for pragmatic couples to make the tough decisions of first shelling out on their homes.

love marriage baby

While building a home together is a beautiful thing, be aware that it is not like taking a stroll in the park. In fact, it could be harder than saying “Yes” during the exchange of wedding vows itself. I mean, how many ladies actually say NO when proposed to? Women have a weak spot. When men drop to one knee and propose, the waterworks go off and all they can do is say YES!

Taking a mortgage together before the promise of “forever ever after” could have a totally opposite effect.

Shrek and Fiona do not have to worry about mortgage

shrek-forever-after

It is not hard to see why. If you think breaking up is hard, try doing it when bricks and mortar are involved. With your heart broken and dreams shattered, you would have to find a middle ground in dealing with the joint name property. Hard decisions like:

  • Is selling the property a mutually agreeable decision?
  • What is the right price?
  • If you are already…ahem…cohabiting, who stays and who goes?
  • How is the outgoing party being “compensated fairly?”
  • How about the money spent on renovation and other home improvements?

Then comes the issue of mortgage. Is the loan under both parties? There may be instances where both partners’ income are required to qualify for the financing facility. The irony is – getting out of a relationship before the marriage can be a lot easier than getting out of the mortgage. Banks, lawyers and high fees will be inevitably involved. If one party does not fulfill his responsibility in making the mortgage repayments, the other has to make good, or else both parties could have their credit rating CCRIS impacted.
Read up on how to check CCRIS report online here.

Other ramifications in buying joint-name property before marriage include the legal type – and this has to do with Malaysia Wills Act 1959.

As much as people say marriage is just a piece of paper like your bachelor’s degree, without that simple piece of Registration of Marriage, financial arrangements can be murky.

This is where estate planning is involved. When you purchase a property before marriage, it gives you tenancy in common, meaning – an equal ownership of the property but not joint ownership.

In the event of one party kicks the bucket, the share of the property will go to the deceased’s heirs, and not the partner.

Tenancy_In_Common_2

There will be times when you find it difficult to resist the allure of a startlingly good buy, but it may be worth having a conversation that revolves around the following questions:

  • Should the property be joint names?
  • How about joint mortgage?
  • How would you split the ancillary costs, such as down payment, renovation, assessment and other related expenses?
  • Should you keep records of individual payments?

Adapted from Simply CJ – Personal Money Sept 2014.

To wrap this up and cheer you up a bit, watch this video by JinnyBoy on My Generasi

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