First-time buyers. Unmarried, unequal deposit...

joenitro

Hi all,

I am buying a house in Scotland with my girlfriend shortly. Not to actually live in ourselves, as we live in Gloucestershire, but her parents will live in the property and keep an eye on the much needed renovations!

Anyway, we've had a mortgage offer etc etc. Our solicitor has advised that as we are unmarried and I am putting in a greater share of the deposit (me £20k, her £10k, total price of house, £150,000) that we should have a "co-purchasers agreement" drawn up, just in case we split up. I am thinking that it would be a good idea to do this. Is it a specific document, or would it be one that our solicitor would do herself?

BitterAndTwisted

I believe that it's called a "deed of trust" and it would need to be drawn up specifically for you and your g/f.

I don't need to warn you of the possible complications of having family members living in a mortgaged property, do i?

joenitro

Thanks BitterAndTwisted, the deed of trust sounds like thats a good start.

And I guess it wouldn't hurt to go through the complications for me, if you have the time? I know that our mortgage advisor has said that mortgage companies don't like family members living there as it's hard/impossible to evict them, should we default on the payments and they need to repossess the property. Is that all you mean or are there other implications that I have been naive about?

whatyadoinsucka

why don't the parents of your partner get a mortgage, seems a funny arrangement that could end in tears

joenitro

They are both retired now, so obviously can't get a mortgage. They've been claiming housing benefit for the last 8 years as they have very little capital or cash any more.
Currently they rent privately and the housing benefit that they get (£320 p.c.m.) just about covers the rent. There is a possibility of them still being able to claim this if they live in our potential purchase, which would clearly be desirable to assist paying the mortgage each month.

We are not buying the house just so that they can live in it though, we are buying it as an investment mainly, just to get on the property ladder. As we have no bills here where we currently are, we have been able to save up the deposit and can afford to pay the mortgage ourselves.

Clear as mud

DVardysShadow

joenitro wrote: »

... We are not buying the house just so that they can live in it though, we are buying it as an investment mainly, just to get on the property ladder. As we have no bills here where we currently are, we have been able to save up the deposit and can afford to pay the mortgage ourselves.

Clear as mud

Have you considered that you might be being taken for a sucker here? Sorry to be so blunt about it. It is all very well being 'on the property ladder', but 2 old duffers living in your rung on the property ladder means that you will not live in your own home until they have shuffled off to care at least. If they are young enough to supervise renovations, then they could be making you rent for years. And if they rent from family members they will not be eligible for Housing Benefit - and if they stay around for long enough, there may be no more housing benefit.

So how do you feel being Landlord to 2 elderly and vulnerable people, who don't cover the mortgage while you have your own rent to pay - and you can neither ask them for more nor evict them.

'Tis a grim future on your particular rung of the property ladder.

Yorkie1

Also, have you fully investigated what being LLs in Scotland means? It's a different set of laws from in England, you must be registered as LL, plus the usual stuff like annual gas safety certificates, EPCs.

Have you fully declared to your potential mortgage lender that you won't be living in the property - so you're applying for a buy to let?

I agree with DVShadow's post - the potential complications down the line are huge. What happens if you and your partner split up? The house will in all likelihood have to be sold, thus turfing the parents out onto the street again. Have a look on these forums - there are numerous threads where people have bought property in good faith about their relationship but things haven't gone as planned some months or years down the track.

joenitro

Yes, this is a major concern of mine if I am honest. Although you might have misunderstood slightly. We don't pay for anything where we live currently, apart from phone bills, internet, mobile bills, Sky bill and food etc.
However, yes, if my girlfriends job here went sour, then things could be a bit tight (or we'd have to move up to Scotland) although we've been here now for approximately 7 years with no problems.

All we are trying to do is take advantage of our situation here with very few outgoings, to get a foot on the ladder. As we can't officially get a buy to let mortgage (mortgage advisor told us that you can't get one unless you own another property already?) we are trying the next best thing.
For arguments sake, i suppose we could buy a house down here for a similar price, but we couldn't rent it out to anyone as not a buy to let mortgage. Also, we wouldn't want to be living in it ourselves, as we already have somewhere to live with the bills paid for us! And mortgage companies don't want you to buy somewhere if they know you aren't going to be living there, do they?

BitterAndTwisted

Please be advised that should you apply for Consent to Let from your mortgage lender it is likely to be for a defined period, usually for a fee but they could refuse permission altogether. Have you considered the consequences of that to you and your g/f's parents?

Have you considered what the consequences might be to have parents, not even your own, living in a property for which Housing Benefit could not be claimed?

What would happen if this lovely cost-free accommodation supplied with your g/f's employment ended?

What would happen if your relationship broke down?

Jesus, Mary and Joseph do you really appreciate the risks you could be taking?

Trollfever

As you will be running a property investment business you should take professional advice about drawing up a partnership agreement.

DVardysShadow

joenitro wrote: »

Yes, this is a major concern of mine if I am honest. Although you might have misunderstood slightly. We don't pay for anything where we live currently, apart from phone bills, internet, mobile bills, Sky bill and food etc.
However, yes, if my girlfriends job here went sour, then things could be a bit tight (or we'd have to move up to Scotland) although we've been here now for approximately 7 years with no problems.

All we are trying to do is take advantage of our situation here with very few outgoings, to get a foot on the ladder. As we can't officially get a buy to let mortgage (mortgage advisor told us that you can't get one unless you own another property already?) we are trying the next best thing.

Now you have explained the bits which may have been misunderstood, this only reinforces the argument that your would be a truly awful way of getting on the property ladder [Aside: why is it I get this sinking feeling most times I see the expression 'a foot on the property ladder'?].

Your GF's parents would have the stability from your 'foot on the property ladder' - you would be homeless if your gf's job went sour - your feet would actually be in the dung. Being property owners already, you would be even less eligible for social housing