Joint mortgage but different deposits

coolmanlr

Planning to buy a property with my partner.
One of us has a bigger cash deposit available
ie.
House £200k
Partner 1 £50k deposit
Partner 2 £20k deposit
Mortgage taken £130k

We would like to owe the property 50:50

Is it possible to take on different shares on a joint mortgage? (I know this sounds stupid) How would that work in practice?

I realise the easy option would be to have different shares on the property ownership, but we would rather be in joint tenancy and share 50:50 any gains (or losses) since we will jointly undertake/pay extensive renovations.

Eventually I will consult a solicitor, but would have like a first opinion :j

Thanks for your help

Cannon_Fodder

A joint mortgage is 50:50. The lender wants to be able to come after either of you for arrears (for the whole amount if necessary) or evict both of you. Your suggestion could not work in practice, which is why they don't do it.

If the property is owned 50:50, the person putting in £50k will not be sure of getting it back. If they don't mind, you can opt for 50:50 ownership.

If they do, then tenants-in-common with a split of ownership to account for the differing deposits will be necessary.

If 50:50 overrides other considerations, why not just put in £20k each? A 20% deposit should still get a decent-ish deal.

Best option in my mind, is to match the proportion of ownership to the portion of deposit and make the renovations contributions also match that proportion.

Thinking it through a little more, I don't know how complicated solicitors like a 'deed of trust' to get, but you could presumably specify something like;

Partner 1 owns 25% for their deposit.
Partner 2 owns 10% for their deposit.
Remaining 65% is split between the two of you, as sharing the mortgage. i.e. 32.5% each.
Renovations are paid for equally.

When sold, the percentages apply to the split of funds.

Yes, the £50k person gets 57.5% versus 42.5%, which partner 2 might think unfair. But that partner needs to consider that but for the extra £30k, you would both have had a worse mortgage deal probably, and definitely higher monthly mortgage payments, so partner 1 should get something extra for "carrying" the other partner and more of the risk to prices falling.

getmore4less

You can't do an mortgage anything other than joint 100% you both owe it all anyway so you can agree how you like to pay it it makes no difference.

An agreement that keeps the house 50:50 you paying different shares of the mortgage can work but you have to do it right and have good exit agreements. So cover all the if X happens we do Y

The key point of going joint tenants is that if the other person dies they inherit both the house and the full mortgage so if this is a potential issue you need to look at things like life cover.

The way it works is you take on the share and on selling you get 50:50 then pay back your shares of the debts from your share, allthough in practice the mortgage gets paid first and you split the debt/profit t match the calculations.

The advantage of this is that you do 50:50 for improvements as well which keeps things simple going forward.

Overpayments on the debt are done at the debt ration not 50:50

Another way is to do a loan between yourselves. but in practice this works out the same as just splitting the mortgage unless you want to do differnet terms for example if you are a higher earner with lower deposit you can use the loan as a vehicle to track getting to 50:50.

With your numbers your partner lends you £15k on what ever terms you like and that way the house and mortage are 50:50 with this side agreement. You both put down £35k and pay 50% of the mortgage each.
You pay

if you want to go own you pay different amounts it is easy you pay the mortgage 80:50 and when the debt is to be repayed you pay back 80:50 from our share of the proceeds. Overpayments are also in the ration 80:50
repayment ot interest only t just works need to keep track of anything.

Personaly I would go with ownership 50:50 with either of these side options a differential payment on the mortgage or side loan keeping all input after that 50:50,

Anything other than 50:50 can lead to I own more than you so we should do this arguments, also if you don't share the improvments 50:50 it becomes a nightmare working out shares.

We did something similar and kept the house 50:50 but the higher earner subsidised in other areas like holidays.

The key to all of this is working through the exit senarios and agreeing them in advance, and keeping them upto date.
death, splitting up, job losses, illness, children,marrage don't go oh that won't happen, talk about what if it did and write it down.

If you agree but later change your mind over something work through it again, you could always post to see if you have thought of evereything

getmore4less

Cannon_Fodder wrote: »

Thinking it through a little more, I don't know how complicated solicitors like a 'deed of trust' to get, but you could presumably specify something like;

Partner 1 owns 25% for their deposit.
Partner 2 owns 10% for their deposit.
Remaining 65% is split between the two of you, as sharing the mortgage. i.e. 32.5% each.
Renovations are paid for equally.

When sold, the percentages apply to the split of funds.

renovarions should be paid on the ownership ratio 57.5:42.5 not 50:50

coolmanlr

Thanks guys for taking the time to reply in details

Yes ownership at a ratio with renovations costs split at a ratio sounds a bit impractical (especialy if we do a lot of DIY jobs)

For simplicity I would consider both putting in £20k

But otherwise 50:50 ownership with a mutual agreement on a mortgage share ratio sounds good

I take it we could get it in writing by a solicitor, and we then top up a joint account in line with our share ratio for payments and overpayments, then the bank take the overall mortgage payment from that account.

Thanks again, appreciated.

[Deleted User]

An alternative way - which is what I did a few years back - is simply that the partner paying less gradually pays back half the difference over time. So if partner 1 is paying 30k more, then partner should pay partner 1 £15k.

We had this as a very informal arrangement which suited us, and after a couple of years, we were effectively equal again. But obviously it doesn't have any legal standing should you split up in month 2 over an argument about soft furnishings.

magpiecottage

Well said, Cannon Fodder.

Many people try to argue to lenders that the other partner is responsible for the part of the mortgage not being paid but the lender needs its money back and cannot sell half, or any other fraction, of a house.

That is why all borrowers must be liable for the entire amount regardless of what private arrangements they may enter into over responsibility for payment.