Cohabitation - advice please?

KME91

Hi, I'm hoping you clever people can help me?

The situation is as follows:

My partner and i are about to buy our first home together. The mortgage and deeds will be in his name due to my poor credit rating, however we will be paying 50/50 all mortgage bills etc. We are going into this with the intention that this will be our home, but obviously I am aware that my rights are limited in that without my name on the mortgage/deeds he could kick me out at any minute and leave me with nothing. Likewise he is worried that I could do a runner and leave him with a costly home to pay for alone. He also doesn't want us to have any joint financial products as this will have a negative impact on his credit rating.

Neither of us intends for that to happen but clearly we need to be sensible about this. I should also point out that I was in a whole lot of debt, but am now down to the last £1500, repayments on which we have factored into our budgetting. we will have put in almost equal amounts to the deposit, if that makes any difference.

So what I think we need is some kind of legal agreement setting out that in the event of one of us leaving we are still jointly liable, and that neither of us can kick the other out without recourse. or is it enough that I am able to show that we've been splitting the bills 50/50? most cohabitation agreements seem to be geared at letting one party walk away with no responsibility, whereas we're trying here to commit to this together, as if we were both named on the mortgage/deeds, which just isn't possible at the moment.

so any ideas people? I'd be really grateful for your thoughts

princeofpounds

You want to make a deed (rather than a contract, which requires a consideration, or payment, to be binding). A lawyer can probably draw one up for you quite cheaply - you could even do it yourself with a bit of education, but getting it right is important so I'd recommend a lawyer - but it helps if you have an idea what you want to achieve first.

KME91

Well what we want to achieve is pretty much as said really, both protected in the case that one does a bunk. We've both got life insurance with the other as beneficiary should something terrible happen. but i want to know if i spend the next five years paying half the household cost then he can't just kick me out with nothing. (sounds so cold doesn't it?)

Fire_Fox

You can't really have it all ways, you want all the rights and responsibilities attached to home ownership but not to actually be a homeowner! Your OH cannot protect himself from being left with the repayments if you do a bunk, he alone is applying for the mortgage and he alone will be liable for the repayments. Is there sufficient room in the house for him to let a room if you do split? Have you also considered what would happen if you got made redundant, had a difficult pregnancy, fell ill or injured and could not work? You could not claim either support for mortgage interest OR local housing allowance as you will neither rent nor own.

You can protect your equity by having your solicitor draw up a 'deed of trust' which basically means you have a second charge on the property - but if the house was to be sold you only get your cut back after the mortgage, legals and estate agent invoices have been settled. That means if the market stays stagnant or falls further you may be out of pocket. It may be difficult for you to ensure in advance you get consideration for any ongoing repayments or investment as any assurances may need to be agreed by the lender. You could/ should both keep thorough records of who pays what and then any financial split can be decided by a court.

Really you should be paying your debts rather than putting money down on a deposit - if you have late or missed payments these do not fall off your credit file until six years after the account is settled and closed. If you have defaults the position is better, the six years starts from the date the default was lodged.

RAS

Sounds eminently sensible. And as you say, he wants to know he is not goign to be left in the lurch.

How long before you credit rating recovers?

KME91

Fire_Fox wrote: »

You can't really have it all ways, you want all the rights and responsibilities attached to home ownership but not to actually be a homeowner! Your OH cannot protect himself from being left with the repayments if you do a bunk, he alone is applying for the mortgage and he alone will be liable for the repayments. Is there sufficient room in the house for him to let a room if you do split? Have you also considered what would happen if you got made redundant, had a difficult pregnancy, fell ill or injured and could not work? You could not claim either support for mortgage interest OR local housing allowance as you will neither rent nor own.

You can protect your equity by having your solicitor draw up a 'deed of trust' which basically means you have a second charge on the property - but if the house was to be sold you only get your cut back after the mortgage, legals and estate agent invoices have been settled. That means if the market stays stagnant or falls further you may be out of pocket. It may be difficult for you to ensure in advance you get consideration for any ongoing repayments or investment as any assurances may need to be agreed by the lender. You could/ should both keep thorough records of who pays what and then any financial split can be decided by a court.

Really you should be paying your debts rather than putting money down on a deposit - if you have late or missed payments these do not fall off your credit file until six years after the account is settled and closed. If you have defaults the position is better, the six years starts from the date the default was lodged.

I don't mean to be rude, but i'm not trying to have it all ways. I'm trying to make the situation work with the problems that we have. I would love to be a homeowner, however no mortgage company in the world is going to lend to me as things stand at the moment. In a couple of years things will be diffrent, my credit rating will be nice and healthy again and we can do things jointly.

my employers give very generous sickness maternity and redundancy packages (I've been a civil servant for ten years), so I am not worried about that aspect.

my parents gave me the money for the deposit, out of an inheritance left by a relative, so please don't make assumptions about me. and i know all about defaults, that wasn't what i was asking about. My debt is very much under control, and the small amount that i have left to pay back is showing a positive marking on my credit file every month so is rebuilding my credit record, as it has no defaults on the account.

I'm not looking at this from the perspective of wanting to end up with half a house, i'm just trying to make sure we both do the right thing by the other in the event that we end up spliting up. we've both made the commitment to buy the place, i'm just trying to stand up to that commitment.

KME91

RAS wrote: »

Sounds eminently sensible. And as you say, he wants to know he is not goign to be left in the lurch.

How long before you credit rating recovers?

About two and a half years. We chose to buy now because my debt is all but paid, (three or four months to go) the housing market will probably start to increase in price soon, and at the moment we're both living with his family, which was only really meant to be a short term measure, as there's not enough room for us really.

our intention is to stay put in the house for at least that long, it's big enough that if we want to have children there are extra bedrooms and space etc, so we'd only really want to move if we could afford something bigger, by which time we'd be buying together.

Fire_Fox

KME91 wrote: »

my parents gave me the money for the deposit, out of an inheritance left by a relative, so please don't make assumptions about me. and i know all about defaults, that wasn't what i was asking about. My debt is very much under control, and the small amount that i have left to pay back is showing a positive marking on my credit file every month so is rebuilding my credit record, as it has no defaults on the account.
.

I apologise if you thought I was making assumptions for having debts, not at all I have spent plenty of time on the DFW board. I meant from a practical/ financial POV you should pay off your debts as that is the exact advice that Martin himself gives. The comment about late payments is from personal experience, I have some due vanish late in 2010 so I am in no position to judge ...