How to 'ring fence' overpayment on joint mortgage?

Sensible_Jess

Hi all
I am about to buy a home with my partner - we are buying as 'joint tenants' with unequal shares as we have unequal deposits (his 50K, mine 30K). We will share the mortgage, bills etc equally 50:50 when we move in.

I got a new job this year which has enabled us to do this - before this we lived far apart from each other. I am lucky as my employer will re-imburse some of the fees of moving / buying a new house (solicitors etc) as part of my relocation package.

I don't know exactly how much the amount will be (as it is taxed) but it's likely to be substantial. I also won't be able to pay it in as part of my inital deposit as I can't claim it until the house is bought. (and no, I'm not an MP :rotfl:)
I intend to put this unexpected 'bonus money' into the house, this way we will both benefit from it as the mortgage payments will be lower. I'd also like to make regular overpayments to the mortgage so I can eventually have the same equity in the house as my partner.

As I only get this money once from my employer, I want to be able to 'ring fence' this and any overpayments I make in future so that if (heaven forbid) we split up, it is clear that it remains mine and I can take it back out of the house when it is sold / my partner buys me out etc so I can afford to buy somewhere else - this area is a lot more expensive than where I was living before.

I've had a nasty experience before this when I did the same with an inheritance and redundancy I received. When my ex-husband and I split up, I lost half of this money as the equity in the house was split 50:50 (apparently proving that the money went from my employer to my personal bank account to the mortgage company was not proof enough to stop him getting half of it!) So I'm VERY keen not to make that mistake again.

The solicitor handling the sale says he'll draw up a declaration of trust for us both. However, as he is the 'family' solicitor, I'm not sure he'll look after my best interests and having just moved here I don't know a good solicitor to ask to check it all out.

So I thought I'd ask you good folks for advice... Please help!

Thanks
S-J

Cannon_Fodder

Your declaration/% share document will presumably reflect/detail the split of your deposits, £50k vs £30k, so why not just adjust the ratio/detail to include the extra amount once you've got it sorted ? It'll cost an extra fee from the solicitor, probably, but for peace of mind...

I don't think you'll want to incur solicitors fees every month, as you overpay and add another 0.35% to your share of the house, though..! If the interest rate isn't too far above 3.5%, there are some ISAs out there that you could drop the spare cash into and do a once a year lump, instead ?

If you have doubts about the family solicitor, ask for a recommendation from him of another partner in the same firm, then have an individual consultation ?
There are rules above client confidentiality etc within the same firm. Should be ok.

Sensible_Jess

Cannon_Fodder wrote: »

Your declaration/% share document will presumably reflect/detail the split of your deposits, £50k vs £30k, so why not just adjust the ratio/detail to include the extra amount once you've got it sorted ? It'll cost an extra fee from the solicitor, probably, but for peace of mind....

I think that may be a good solution for the lump sum and I've asked him to hold off drawing it up for that reason. However, we had to let the land registry know (via solicitor) of the % split that will go on the deeds - and that was from the initial deposit amount. Would this make a difference?

Cannon_Fodder wrote: »

I don't think you'll want to incur solicitors fees every month, as you overpay and add another 0.35% to your share of the house, though..! If the interest rate isn't too far above 3.5%, there are some ISAs out there that you could drop the spare cash into and do a once a year lump, instead ?.

5.69% fixed for 5 years and interest calculated daily so I'd rather pay off the mortgage. I plan to save and then every quarter pay in a lump sum (leaves a bit of cash in case I need it for emergencies in the meantime)Also I'm a bit proud and hate the fact that my partner owns more of the house than I do! Will feel much better when it's 50:50.

Cannon_Fodder wrote: »

If you have doubts about the family solicitor, ask for a recommendation from him of another partner in the same firm, then have an individual consultation ?
.

The 'partner' has been dealing with our buyers - and is an absolute weasel! Too long to go into here, but no, not happy with going to him for advice!

Kaz2904

Would your OH be content for you to "owe" him the difference? If you were to set up a snowball on www.whatsthecost.com you could set how much short you were. Then set how much (if any) interest he was going to receive each month from you. Then you know how much you need to aim for each month and are able to update your snowball each month to see how much you still owe him (the mortgage) and how close you are to repaying it.
Or you could just not pay him any interest and repay what you can until you have an equal deposit (IYSWIM?) - I suggest this as you will be saving him money (as well as yourself obviously!).


Legally, I'm afraid I have no idea!

getmore4less

Not read the thread yet but to answer the basic question

"How to 'ring fence' overpayment on joint mortgage?"

Offset with seperate accounts will do that.

not without other complications.

dimbo61

Yorkshire Building society do a 5 year fixed offset mortgage, in the papers today as a best buy and you can have 2 or 3 seperate savings accounts attached to the mortgage.
One in your name and one in his ( and one in bank of mum and dad!!!)
Maybe too late now but we are happy with our offset mortgage

Debt_Free_Chick

Sensible_Jess wrote: »

As I only get this money once from my employer, I want to be able to 'ring fence' this and any overpayments I make in future so that if (heaven forbid) we split up, it is clear that it remains mine and I can take it back out of the house when it is sold / my partner buys me out etc so I can afford to buy somewhere else - this area is a lot more expensive than where I was living before.

I don't see how this is going to work as every time you make an overpayment, your share of the equity is going to go up a little bit. So the share could, in theory, be changing every month!

Also, you would effectively be "saving" in the property, whereas you could avoid the possibility of your OH ever having a claim on your savings if you simply kept the money out of the house.

I'd suggest that you pay your OH £10k and then have the property as joint owners - as your deposits would then be equalised. Surely he would trust you to pay him this, so that you can be equal joint owners from outset and avoid having to change things later on?

If you are going to overpay, then you should do it jointly so as to keep the equity equal.

Having unequal shares is fine if you start off that way and remain the same. But your current thinking would have you constantly paying fees to draw up or change aggreements and land registry documents.

Just my tuppence worth ....

Sensible_Jess

Hi
Thanks for the replies so far:
The mortgage has been chosen and can't be changed to an 'offset' one, but that was an interesting idea - thanks!

Debt_Free_Chick wrote: »

I'd suggest that you pay your OH £10k and then have the property as joint owners - as your deposits would then be equalised. Surely he would trust you to pay him this, so that you can be equal joint owners from outset and avoid having to change things later on?....

I don't want to give OH the money to make our deposits equal - that's slightly missing the point here. (I also haven't given the exact amounts we are paying in as firends of mine use this forum - it's more that I have stated) OH is, howver, paying more deposit than me.
The main point is, this money from my company is meant for ME to be able to afford to relocate to the new area (house prices about x2 where I have moved from). If OH and I split up, I still want to have access to the money for a potential deposit for a new place.

Another issue is that our mortgage is going to be HUGE due to the higher house prices in the new area - I am used to having a much smaller mortgage (with smaller repayments) so my priority is to start chipping away at it as soon as possible, especially with interest rates on savings being so low at the moment. I'd like to use the money that I'll get from my work to pay some of if off whilst I can as this will (a) reduce the loan (b) lower the repayments we make. which will benefit both us of and be an investment for both of us.

I'm not anticipating that we'll split up, in fact I'm hoping we won't! It's just that having lost a substantial amount previously from being naive, I don't want to make the same mistake again.

notisis

If you want access to the amount your company are going to pay/reimburse you for relocating then I should think the best option is simply (as others have suggested) to place this in an interest bearing account. When you are then happy you have a large enough amount, pay this off the mortgage and have the declaration of trust amended to show the higher amount of equity you will then have. It may take you a year or two to do this but this would give you the peace of mind of having the cash available and an eventual goal of having more equity/paying off the mortgage. Any problems in your relationship I would imagine would show within the first year or so as this appears to be the first time you will be living together as I you said you previously lived separately. I don't see how you can otherwise ring fence any sums you pay off the mortgage with your present mortgage setup. I do hope everything works out with your move, new job and relationship.

getmore4less

Sensible_Jess wrote: »

Hi all
I am about to buy a home with my partner - we are buying as 'joint tenants' with unequal shares as we have unequal deposits (his 50K, mine 30K). We will share the mortgage, bills etc equally 50:50 when we move in.

Do you realy mean joint tenants, you both own 100%

If one of you dies the other person owns the house.

http://www.hmrc.gov.uk/cto/glossary.htm#j

Sensible_Jess

getmore4less wrote: »

Do you realy mean joint tenants, you both own 100%

If one of you dies the other person owns the house.

http://www.hmrc.gov.uk/cto/glossary.htm#j

No I meant tenants in common - best way as we have unequal deposits to put into the house initially.