Mortgage with partner-how it works?

jakesuk

Hello everyone

Can anyone explain to me how this scenario works?

Myself and partner get a 30yr mortgage on a property of which we intend to own 50/50. She puts down 75% of the deposit, and we both make equal monthly repayments.

If she has invested more on Day 1, then surely the interest due on her half of the mortgage is lower. How is this calculated? It doesn't seem fair for her to pay the extra interest due on my half of the mortgage with the end result being after 30years that we have both repaid the same amount.

Also, if we make different monthly repayments this complicates things further.

Any help on how the above works would be appreciated, the only way I can think of is somehow manually calculating interest and capital repaid on a month by month basis!

wymondham

Is there a reason you'll be buying like this? It seems overly complicated, why not just have a normal joint mortgage?

seeff

wymondham - I assume this is a stand joint mortgage, it's just the OP wants it to be fair 'within the relationship' rather than just an agreement with the bank.

We are in a similar situation - I paid 33% of deposit, but to compensate I pay back 66% of monthly mortgage. As I earn more but OH had more (inheritence) so this really works for us. Our mortgage is fixed rate through and close enough to 50% LTV to simplify a few things.

You could argue that I'm going to be out of pocket at the end of the way (ie at the end of the mortgage I'll have put more money into the house) but frankly you can't make this fair - we discussed it at length and have done the calcs, and you can view it in a million different ways each giving different answers. There's lot of unknowns on a 30 year period (interest, inflation) and even if you calculate to the penny 'couple stuff' really messes up the calculation - illness, pregnancy, job loss, spliting up, after 25 years does it matter any more anyway - particularly if one of you might not have put the finances in but has done all the DIY? Also you need to consider that the mortgage is only one of the 'couple finance problems' - what is the split for bills, savings, etc - there's no point having a fair mortgage if one of you can't afford do other things.

So best advice is to keep the arrangement conceptually simple so it balances a little better than just 50/50 spilt - eg you pay the interest on the equivalent of the 50% (=75% of hers - 25% of yours) deposit value you couldn't match. If you earn more than she does you can be bolder with this - may overpay until you've matched her initial investment - then drop to 50/50.

Whatever way, if you record what you put into the mortgage then you can rethink and maybe recalculate when you come to remortgage / move house. Finally don't let any arrangements stop either of you from overpaying!

jakesuk

seeff wrote: »

wymondham - I assume this is a stand joint mortgage, it's just the OP wants it to be fair 'within the relationship' rather than just an agreement with the bank.

Exactly right.

seeff wrote: »

So best advice is to keep the arrangement conceptually simple so it balances a little better than just 50/50 spilt - eg you pay the interest on the equivalent of the 50% (=75% of hers - 25% of yours) deposit value you couldn't match. If you earn more than she does you can be bolder with this - may overpay until you've matched her initial investment - then drop to 50/50.

I take on board what you've said. I suppose a rough calculation is fine because in my case I can't see it having a huge effect.

Thanks for your advice

silvercar

What happens when one of you has a career break? Then goes back to work and is forever on a lower salary due to family commitments?

Mini_Bear

Also make sure the percentage deposit paid by each partner with the purchase price is documented with the solicitor. that way if the worst happens (and i hope it doesnt) you can both take out of the property what you have put in if you go your seperate ways.

wymondham

seeff wrote: »

wymondham - I assume this is a stand joint mortgage, it's just the OP wants it to be fair 'within the relationship' rather than just an agreement with the bank.

.. in a relationship does this all really matter? if you're getting to the 'i paid this, so you pay that' isnt that a bit picky in a relationship?

Squish_21

U can get a deed of trust (or something like that) - We have one through the solicitor when we purchased. I paid 95% of the deposit on our place so if we split and sold i get back my deposit first if there are any profits, then bf gets his % then the profits (if any) are split 50/50. We pay the same amount towards the mortgage each month.