Buying My 1st House With My Partner

The_Bag

We've had our offer accepted for £160K & I'm going to pay the deposit of £64K (40%) & put another £4-£5K into a joint account towards solicitor fees, surveyor fees, mortgage fees, & towards furnishing the house etc. My partner can only afford to put £2.5K into the joint account towards the above.

We've budgeted to spend about £1.2k a month on the mortgage, & other household bills. As I earn approx 3 times my partners wage I've agreed for her to pay £300 & me £900.

Would it be possible to have something drawn up by the solicitor so if we were to part before we were married & we agreed to sell the house that after solicitor fees & estate agent fees I would be entitled to my deposit of up to £64K or 40% whichever the higher & the remainder to be split 50/50??

When I spoke to our solicitor today she said that it would need to be Tenants In Common with unequal shares (70/30). My worry is though that if we were to part say after 24 months & just say after the solicitor & estate agents fees we were left with £70k would this be then split 70/30 (£49k me & £21k my partner) or would it be £64k mine & the remainder split 50/50 (£3k each)

If it's possible for the latter by law what should I ask the solicitor to do?? Or if not how would I get around this problem?? :beer:

The_Bag

Please :j Help

mark5

I think you need a deed of trust.

The_Bag

OK thanks. Would we need to set it up as Tenants In Common each having a 50% share & with a Deed Of Trust to protect my initial deposit of £64k or 40%???

MobileSaver

Tell the solicitor exactly what you want to achieve and let them advise on the best way to formalise it - you are paying for exactly this sort of professional advice.

What is crucial is that your partner gets independent legal advice (you can pay for it so long as she chooses the solicitor) so if things do go unexpectedly pear-shaped several years down the road there can be no accusations of the agreement being signed "under duress" and thus void.

mark5

Hope this helps,

If there's one document that you should absolutely positively have when co-buying it's a Deed of Trust (also known as a Trust Deed or a Declaration of Trust). This can be a simple document drawn up between co-buyers and their solicitor(s), costing no more than a couple of hundred pounds, or it can be as costly and complex as you wish it to be. This is the document that is created between you and signed at Exchange of contracts when buying a property that sets out each of your legal rights over the property (what percentage of its value you each own), how the major costs of ownership are to be split and how the co-buyer relationship will end.
Knowing what percentage of the property's value you own and having this protected in law is important. There is no rule that says two people who decide to buy together have to contribute an even amount to the purchase or upkeep of the home. If you contribute 75% of the money and your co-buyer pays the other 25% who records this fact so when you sell you are guaranteed to get the correct percentage back? Not the mortgage lender, as they only note that you both own the property jointly. Not the Land Registry, as they are just interested in your names to register total ownership. It's actually up to you to do this, and the Deed of Trust states the exact percentage of value of the property that you both legally own.
The major costs of ownership can be anything from the percentage of the total mortgage you are each responsible for paying to repair bills on the property or periodic maintenance. Running a property is a costly business, and if you find a year down the track that you need a new roof who will pay for it? Will things be split 50/50 because you both live in the property and gain the benefit from it, or will it be split 75/25 like the ownership? There is no right or wrong answer here, only negotiation with one another to decide right from the beginning how you are going to handle situations like this so that you are both comfortable with them.
Co-buyer relationships have a natural time limit. To stereotype a typical co-buyer, he or she would be in their 20's and 30's, in their first or second jobs and single (of course there are many people out there looking for a co-buyer through SharedSpaces who do not fit this mould, but I'm generalising here). After a few years have gone by it is natural to assume that many co-buyers will either find that their salaries will have gone up to a level where they can now afford their first solo property or they may have started to think seriously of settling down with their partner. Many people considering co-buying set a legal time limit on the relationship by including it in the Deed of Trust. It could be any number of years you decide upon between you, but having a finite end to the relationship once again means that you are planning your relationship rather than winging it and dealing with the surprises as they occur.
One of the most important factors in drawing up a Deed of Trust is in the thought process that goes into it's creation. If you have been lucky enough to find a decent solicitor they will take the time to make you consider every important aspect of your relationship with your co-buyer partner, including what happens when you decide to sell. This will once again tune you into one another's thoughts so you are as sure as you can be that you are following the same path and have the same aspirations and dreams for the property you are considering buying together.

The_Bag

OK thanks for the info.

I spoke to my partner yesterday about this & I think we will go down the avenue of buying as Tenants In Common 50/50 but also to have a Deed Of Trust drawn up with the Solicitor so my initial £64k is secured. Hopefully this will save me from losing out alot if our relationship was to fail. I think also we would need to add other things to the Deed if the relationship was to fail like having to offer each other our share first, to still keep paying our share untill the property was sold or the other person has paid the other person for their share, making wills so if either person was to die the property is left to the other person. Is there any other things that we may need to add?

Thanks again for your help. :T

HappyMJ

If I were advising you and as you are still single I'd advise that you don't buy together. As you can cover the mortgage, the deposit and all the fees I'd recommend you buy it on your own and don't allow your partner to contribute anything towards the mortgage, the purchase or the fees. Let her keep the £2,500 she has. The £300 that she pays monthly could be a contribution towards half of the expenses of living in it and you pay the entire mortgage on your own.

When you get marrried it can then be a marital asset.

The_Bag

Thanks for the advice.

In one hand I feel your advice is the correct thing to do but I feel that if I went down that avenue the house wouldn't be "our home" it would be "my house" & don't think our relationship would be the same as in theory she would only be a lodger.

If I go down the avenue that I posted before as Tenants In Common it would still be "our home" but would have the security that if things did go pear shaped in the short term I would still lose out finacially but not by that much compared to having the house as just 50/50 with no Dead Of Trust in place. In the long term we hope to get married if things go well while we live together, just hope I make the correct decision?? :beer: