joint ownership or tennants in common?

graham_L

Please help!

Just taken out a mortgage in joint names with my partner of 1 year. I'm footing the deposit of 16K and I've agreed that when we sell, my partner can pay me back half = 8K, assuming that we are still on friendly terms if we should ever decide to go separate ways. I understand that under 'Joint Ownership' the property passes automatically to the other party if either of us should die.

I would still like to protect my 16K in the event that I don't get the 8K from my partner. Would it be better to opt for 'tennants in common' and how would my deposit be written into the contract. I do not want to have to do a 'declaration of trust' which will cost more money; or is that my only option?

cheers!

getmore4less

Are you clear what you have agreed for all senarios of prices going up or down?

You really should not be trying to protecting the £16k you are buying a variable value asset with the money.

There are two basic ways to look at this with you providing £16k

1: Your £16k buys a % of the house and depending on how you pay any debt you buy some more % each so the total is 100%.

When you sell after costs you those %ages back and then pay off your shares of the mortgage from that(you do not extract the debt first).

2: You loan the OH £8k for their share of the deposit but be clear that it is an interest free loan, if you then both pay the mortgage equaly you own 50:50 so split the sale costs that way and then the OH pays back your £8k loan.


The best way if you want 50:50 ownership is to split the mortgage to make the ownership equal that way your OH effectifly borrows their share of the deposit on the mortgage not from you as an interest free loan.

eq. £100k house.
You £16k + £34k of the mortgage
OH £0k + £50k of the mortgage

This way any extras to the house can be split 50:50.

The equity on repayment mortgage just works.
With as bit of work you can even overpay your own bits at a different rate.

graham_L

Thanks getmore4less - can you help me further please?

Incidentally, we are having interest only option.

The 2nd way you mention seems to be the simplest way to do this

2: You loan the OH £8k for their share of the deposit but be clear that it is an interest free loan, if you then both pay the mortgage equaly you own 50:50 so split the sale costs that way and then the OH pays back your £8k loan

would we have to choose the tennants in common route or joint ownership route?


But then again this idea sounds good too:

getmore4less wrote: »

The best way if you want 50:50 ownership is to split the mortgage to make the ownership equal that way your OH effectifly borrows their share of the deposit on the mortgage not from you as an interest free loan.

eq. £100k house.
You £16k + £34k of the mortgage
OH £0k + £50k of the mortgage

This way any extras to the house can be split 50:50.

The equity on repayment mortgage just works.
With as bit of work you can even overpay your own bits at a different rate.

Is this the 'joint ownership' way rather than the 'tennants in common' way? if tennants in common do we choose 50:50 share but informally agree to make different payments in relation to the 34K and 50K. If 'joint ownership', does this scenario need to be written into the contract?
The repayments on interest only work out to about £160/month so based on this option what would the respective monthly amounts be for each of us?

Thanks in advance

opinions4u

Have a conversation with a solicitor. Get a full understanding of what the implications are of each course of action and ask for a mutually acceptable separation agreement to be drawn up just in case.

Incidentally, we are having interest only option.

Why?

Conrad

A third party lawyer will be pointless here as it will be the lenders legal department that usualy decide how thier mortgages are framed, as they can't have adhoc random tailor made scenarious floating around on thier mortgage book.
They should be your first port of call.

My instinct is you are over complicating matters anyway. All you need do is write up a document to be lodged with your own lawyers, which sets out who is owed what. I don't think you need worry about getting involved with the lender or ownership hodling styles.

graham_L

to opinions4you - interest only gives us the flexibility to make over payments towards the capital when we can afford to but still have relatively low monthly payments when money is tight.

to conrad - the instruction form I've received from the solicitors asks if we want joint ownership or tennants in common (and what share if tennants in common)

Yes, I may be complicating things if as you say we can put it all in a letter and hand to solicitor - is it really as simple as that?


cheers

graham_L

Conrad wrote: »

My instinct is you are over complicating matters anyway. All you need do is write up a document to be lodged with your own lawyers, which sets out who is owed what. I don't think you need worry about getting involved with the lender or ownership hodling styles.

Is it really as simple as that??

TrickyDicky

graham_L wrote: »

to opinions4you - interest only gives us the flexibility to make over payments towards the capital when we can afford to but still have relatively low monthly payments when money is tight.

Have you had the mortgage agreed yet? what kind of repayment vehicle have you got set up to pay off the mortgage when the term ends? the mortgage company probably wont accept you without it.

getmore4less

Conrad wrote: »

A third party lawyer will be pointless here as it will be the lenders legal department that usualy decide how thier mortgages are framed, as they can't have adhoc random tailor made scenarious floating around on thier mortgage book.
They should be your first port of call.

My instinct is you are over complicating matters anyway. All you need do is write up a document to be lodged with your own lawyers, which sets out who is owed what. I don't think you need worry about getting involved with the lender or ownership hodling styles.

THe mortgage will allways be joint.

The house ownership can be chosen

It is vital to get the understanding correct and make the correct choice it can make a huge difference if you get it wrong.

getmore4less

graham_L wrote: »

Thanks getmore4less - can you help me further please?

Incidentally, we are having interest only option.
Given you want to do it this way with overpayments you need to be clear if the overpayments will be equal or will you overpay by different amounts.

I think owning a house 50:50 is best since you effectivly get equal vote for doing things, if one owns 2/3 then they may try to claim a right to have more say in what is done.

The 2nd way you mention seems to be the simplest way to do this

2: You loan the OH £8k for their share of the deposit but be clear that it is an interest free loan, if you then both pay the mortgage equaly you own 50:50 so split the sale costs that way and then the OH pays back your £8k loan

Would we have to choose the tennants in common route or joint ownership route?

The advantage of the loan is thta it is totaly independant of the house purchase, hat ever happens the OH ows you the money.

So it makes little difference to the equity/debt senario if you go 50:50 but do consider death the choice will make a significant difference to what happens.


But then again this idea sounds good too:

The best way if you want 50:50 ownership is to split the mortgage to make the ownership equal that way your OH effectifly borrows their share of the deposit on the mortgage not from you as an interest free loan.

eq. £100k house.
You £16k + £34k of the mortgage
OH £0k + £50k of the mortgage

This way any extras to the house can be split 50:50.

The equity on repayment mortgage just works.
With as bit of work you can even overpay your own bits at a different rate

Is this the 'joint ownership' way rather than the 'tennants in common' way? if tennants in common do we choose 50:50 share but informally agree to make different payments in relation to the 34K and 50K. If 'joint ownership', does this scenario need to be written into the contract?
The repayments on interest only work out to about £160/month so based on this option what would the respective monthly amounts be for each of us?
need more detail of the proposed house value deposit mortgage etc.

Again the joint or common makes little difference to the equit/debt situation since you cannot change the basic fact that the debt is joint so you both owe all of it to the lender, any payment agreement between you is just that, the lender can still come after both of you for all of it.
If you treat this as two virtual loans then you can work out the interest due and make any overpayment you like on each of your virtual debts.

Thanks in advance

I think you need to look at the saving, income, future income etc to decide which way to go. if one of you has considerably more money that the other it needs thinking about.


Another approach which can work is an offset where you keep your own savings pool, we did this and decided that any interest saving due to the offset pots being a different size would be shared.