How to 'ring fence' overpayment on joint mortgage?

Sensible_Jess

Thanks everone for their input so far. I didn't really want to put the money into a savings account is it will lose money compared to having it in the mortgage as interest rates are so poor at the moment and my payments will be so much it would be nice to cut them a little in the first year! (BTW - I have no other debts to pay off - the mortgage is 'it')

I think I will have to put off the drawing up of the agreement until I am in a position to pay in the lump sum from my company. That I definitely want to go into the house to cut our costs in the first year.

Is there no way I can regularly pay money into the mortgage and legally show that it came from me alone and my OH is not entitled to look on it as 50% his once it goes into the account? Any legal perspectives on this?

thanks

S-J

getmore4less

As has allready been said

Use an offset with seperate savings accounts

You keep the money totaly seperate but still benifit from the saving of interest on the mortgage.

No need to worry about any legals.

It would be a lot easier if you just stuck the same deposits and keep everything 50:50 from the start then keep your own offset pots.

Do you plan to factor this interets saving as "yours" or is this going to be a shared benifit.

Another option is that you do the house 50:50

The one with the smaller deposit just pays a bigger share of the mortgage.

eg £200k, deosits £50k(25%), £25k(12.5%), £125k mortgage split payments as if it was two mortgages £50k(25%),£75k(37.5%)

This way you own 50:50 but own differrent bits of the debt 40:60 in ths example.

Also makes capital injections easier since they are also 50:50 if you split on differnet % then you need to do the same for capital injections.

Sensible_Jess

getmore4less wrote: »

As has allready been said

Use an offset with seperate savings accounts.

Thanks for this , but as I've already said, the mortgage has been chosen and this is not an option. It will be looked at when we remortgage though!

It would be a lot easier if you just stuck the same deposits and keep everything 50:50 from the start then keep your own offset pots..

Yes it would, but we'd need a bigger mortgage for that!!

Do you plan to factor this interets saving as "yours" or is this going to be a shared benifit. .

Any savings in the form of reduced mortgage payments will be shared equally by us both as we're both paying the mortgage 50:50.

Another option is that you do the house 50:50

The one with the smaller deposit just pays a bigger share of the mortgage.

eg £200k, deosits £50k(25%), £25k(12.5%), £125k mortgage split payments as if it was two mortgages £50k(25%),£75k(37.5%)
This way you own 50:50 but own differrent bits of the debt 40:60 in ths example..

I can see this being a good long term solution until the mortgage is paid off but I don;t think the maths work out if we split up.

eg in your example £200k, deposits £50k(25%), £25k(12.5%), leaving 125K mortgage. (split 50:75)
Payments would be approx 800 total so I would pay 480 and OH would pay 320 each month.

After 5 years, how would it work?

We would now owe 112,000. If the house was now worth 212,000 (for ease of calculation) then there would be 100K equity.
By your calculation, we own the house 50:50 so we'd each get 50K.
That mean in five years his investment would be the same, but mine would have doubled!

Not sure this would be totally fair!!:rotfl:

getmore4less

can see this being a good long term solution until the mortgage is paid off but I don;t think the maths work out if we split up.

eg in your example £200k, deposits £50k(25%), £25k(12.5%), leaving 125K mortgage. (split 50:75) (40%:60%)
Payments would be approx 800 total so I would pay 480 and OH would pay 320 each month.

After 5 years, how would it work?

We would now owe 112,000. If the house was now worth 212,000 (for ease of calculation) then there would be 100K equity.

By your calculation, we own the house 50:50 so we'd each get 50K.

It does not work like that you get £106k each then pay of your share of the debt which is split 40:60, £44.8k and £67.2k.

That mean in five years his investment would be the same, but mine would have doubled!

Not sure this would be totally fair!!:rotfl:

By paying the mortgage 50:50 the ownership shares are

(his deposit + 1/2 mortgage) : (your deposit + 1/2 mortgage)

You also need to put any capitial in at this ratio otherwise it becomes a nightmare to calculate the new ownership %

By splitting equity after taking of the debt you get the wrong anwsers and it is not fare to one of you.

It is a common mistake to do it this way but it only works for 50:50 ownership.

mjm3346

Sensible_Jess wrote: »

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!
S-J

Not quite sure why you think it would? If you or he were the only income earner so all the mortage payments came from only one of you it would not stop the other getting their hands on some it if you split up.

You may be able to protect your "share" going in to the relationship (living together) but it is harder to do so for assets acquired while you are together. You may be putting in more cash to the mortgage but he is spending much much more on things for the house, garden, car etc.
His contribution is not just money but also includes doing nearly all the housework, cooking, gardening and decorating.
I am not saying that will be the case but proving you paid more into the mortgage does not automatically mean that you would get more out later if you split up (neither does keeping it in a savings or "offset" account either).
Hopefully the situation will not arise and you will still be together long after the mortgage is paid off.

Dan_1976

I think you stick with the in tenants in common and then save until you have the required amount to pay in. You may not be able to pay any in if you take a fixed with ERC's, so you can lose your money if its in your name and you have the correct % within the company.

If the solicitor is a good solicitor he should treat you both fairly, I am sure he would be insulted if you thought that, weasel or not!

Last thing, before you buy a house with somebody, make sure you trust the 100%

getmore4less

Dan_1976 wrote: »

If the solicitor is a good solicitor he should treat you both fairly, I am sure he would be insulted if you thought that, weasel or not!

From the number of messed up equity arrangements, done by solicitors, we see on here I think many just don't know what they are doing, they don't seem to understsand the basic concept that any agreement should work for ALL senarios to be fare.