FTB - Advice needed - to buy with partner or solo?

Gopes

Hi folks,
My partner and I are thinking of buying a place next year, but there seem to be a lot of permutations to consider. Ideally, I(we) would like to buy a 2-3 bedroom house in SE London, for a maximum of £250k.

Situation:
a) My salary = £55k. Savings (Investments) = £80k
b) Partner's salary = £13k. Savings = £4k
We are currently engaged, but not planning on getting married for a couple of years.

We are in love, and trust each other implicitly, however, the pragmatist in me thinks that it may make more sense for me to get a solo mortgage. Reason for this, is that in the (hopefully unlikely) event that things don't work out, only having my name on the mortgage would make an eventual separation less complicated (we realise this also leaves me with the potential to rip her off, given that she would also be contributing towards the mortgage payments...). We have discussed this, and she agrees with my views.

Although I potentially have enough savings for a sizeable deposit, my savings are mostly in ISAs, invested in shares which are doing quite well. I would actually prefer to spend as little of my savings on deposit as possible. I realise that any mortgage will have a higher interest rate, but I am reasonably confident that my investments will give a higher return than the incremental cost of a high LTV (90%) mortgage.

Questions
1 - Given the differential in salaries, is there much advantage to getting a joint mortgage?

2 - Given the above salary (£55k), I am thinking of maybe a 90% LTV mortgage (so e.g. borrowing £225k). Is this realistic - would a mortgage lender view the fact that I would still have significant savings favourably? If I have to, I would use up more of my savings for a deposit - but as mentioned above, I would prefer not to.

3 - Finally, in addition to my base salary (£55k), my employer has a non-contributory pension scheme, whereby it pays 10% of my salary into the company pension scheme. I receive a further 5% in what is refered to as the Flexible Benefits Scheme (used to buy additional annual leave, dental care, travel insurance, etc.). Given that I could opt out of the pension scheme, and also choose to take the Flex Bens as cash (albeit minus a large chunk of tax and national insurance), could I reasonably add those sums (circa £8k) on to my base salary?

Any views would be greatly appreciated.
Gopes

getmore4less

If she contributes then she owns some of the place so best to get that soerted properly rather than relying on you thinking you own it all just because it is in your name and you have the mortgage.

LTV will determine the rate look at the various mortgage providers to see the differences as you go from 60% to 90% LTV.

Make sure you have an exit plan that can work for all senarious,
split, job loss, death, permanent health problems are a few to think about.

The main advantage of you having on paper the house and the mortgage is if you split you can just carry on living there and paying(if you can) then you need a seperate agreement to divy up the equity(possitive or negative)

Joint mortgages where neither party can take on the debt or pay off the negative equity are the biggest problem for relationships going bad.

dimbo61

Dont give up such a good pension and benefits package you will need that in old age.
Have a look at offset mortgages and that way your G/F can put her money in the offset fund.
Once you are married its 50/50 unless you have drawn up an agreement with a solictor saying who gets what.PRE NUP

Thrugelmir

Suggest you obtain a joint mortgage. Ask your solicitor to draw up a trust deed specifying the division of the property if your break up. This can include you receiving the amount you use as the initial deposit for instance, prior to the balance being apportioned.

As a successful investor I'm surprised you wish to leverage up with £225k of debt. When interest rates are ultimately only heading one way ( correspondingly share prices will react downwards). So no correlation of risk with this strategy.

getmore4less

Thrugelmir wrote: »

Suggest you obtain a joint mortgage. Ask your solicitor to draw up a trust deed specifying the division of the property if your break up. This can include you receiving the amount you use as the initial deposit for instance, prior to the balance being apportioned.

But this is an unfare way to do shares, a common mistake, the money has been used to buy a share of a varaible value asset so should refect that.

To protect the actual value of funds it should be set up as a loan to the other person and they take the risk on the purchase of the asset changing value, typicaly this would not be for the full deposit but part of it to share the risks.

Thrugelmir

getmore4less wrote: »

But this is an unfare way to do shares, a common mistake, the money has been used to buy a share of a varaible value asset so should refect that.

To protect the actual value of funds it should be set up as a loan to the other person and they take the risk on the purchase of the asset changing value, typicaly this would not be for the full deposit but part of it to share the risks.

Not shares. Just both parties receive their initial deposits back , prior to the distribution of the remaining balance. Keep it simple.

Gopes

dimbo61 wrote: »

Dont give up such a good pension and benefits package you will need that in old age.
Have a look at offset mortgages and that way your G/F can put her money in the offset fund.
Once you are married its 50/50 unless you have drawn up an agreement with a solictor saying who gets what.PRE NUP

I am not planning on giving up the pension/benefits plan, but I tend to live quite a frugal lifestyle (I don't drink, smoke, buy expensive clothes, etc). Can I reasonably use the higher figure (base salary plus pension plus benefits) when asking the lender for a quote? Note that the girlfriend will also be paying a small amount in rent. I realise that the lender will not take this in to account, but in real terms, will help with affordability.

Just out of curiousity, after marriage, presumably the 50/50 would only apply if we brought the home jointly. If I buy the home on my own before we are married, I am assuming that legally it wouldn't be seen as 50/50 ownership in the event of an eventual divorce?

Thanks for your help guys.
Gopes

P.S. We got engaged in the last few weeks (we have been together for 2 years), so I haven't started looking in to the legalities of marriage and property ownership - so forgive my ignorance/naivety

Thrugelmir

Gopes wrote: »

Can I reasonably use the higher figure (base salary plus pension plus benefits) when asking the lender for a quote?

Benefits are not salary. So no.

With a 90% mortgage you will be looking at interest rates in the region of 5% to 6%. Do you expect you investments to outperform this rate continuously. If not better to use more savings to obtain a lower interest rate.

Conrad

Gopes wrote: »

I am not planning on giving up the pension/benefits plan, but I tend to live quite a frugal lifestyle (I don't drink, smoke, buy expensive clothes, etc). Can I reasonably use the higher figure (base salary plus pension plus benefits) when asking the lender for a quote? Note that the girlfriend will also be paying a small amount in rent. I realise that the lender will not take this in to account, but in real terms, will help with affordability.

Just out of curiousity, after marriage, presumably the 50/50 would only apply if we brought the home jointly. If I buy the home on my own before we are married, I am assuming that legally it wouldn't be seen as 50/50 ownership in the event of an eventual divorce?

Thanks for your help guys.
Gopes

P.S. We got engaged in the last few weeks (we have been together for 2 years), so I haven't started looking in to the legalities of marriage and property ownership - so forgive my ignorance/naivety

50/50 applies even to common law partners, let alone married. Buying now will make no difference in law as she will be able to claim she contirbuted one way or another.

Your'e getting far too complex. Just do as Thruglemire suggests.

Also your other questions contain too many variables to be ab le to output a meaningful answer as one thing leads to another > to another ad infinitum.

You can postulate anbd theorise ad nauseum, but in the end you will only know how much you can borrow by actualy applying.
The reason for this is that your inputs, individual to you, will impact upon a complex software allogrythm (spell that!).