We're not sure what to do with debt and buying place together

PPink

Hi all

My boyfriend and I need some advice you guys have such good ideas/ advice we want to hear your thoughts.

My boyfriend and I are looking to buy our first place together in the new year. He owns his own place currently and he has about 30k equity based on a flat that has sold in the same block.

The main thing that is causing us issues is that he has a bit of debt, which at the moment he is trying to sort out and reduce before we buy but not all of this will be gone by the time his fixed deal ends in May and we plan to buy together. When the fixed deal comes to an end and we plan to buy our place, he is planning to use half the equity to pay off his debts that remain and half to go back into our new place. I would then match his deposit.

Obviously his debts would affect our chance of getting a mortgage and what rates we are offered but can you think of how else his debts affect us getting a mortgage? He isn't on a DMP , doesn’t have any defaults, missed payments etc.

As I am planning on matching his deposit, is it worth me giving him my deposit to pay off his debt so when we apply for the mortgage they can see that we are both debt free? and the half he was going to release to pay his debts off would be my deposit.

We would rather not add his debt to the mortgage but are willing to hear any ideas you may have about this - though I know it’s generally advised not to.

I'm already aware that between me paying off the debts and buying a house we could have problems so we are planning on signing so kind of agreement so it’s all in black and white and neither of us can claim more than we put/paid off.

Thanks in advance for your thoughts and advice

PP

SuperBOB

Has he looked at his credit rating?

puddy

i dont understand the question, you are buying a place together next may and he anticipates that at that time he will have about 15k in debt

he anticipates that at the time he will have 30k from the sale of his current flat which will be sold at the time you buy your place together?

so he's using 15k to pay off his debts and then 15k to put toward the new place, matching a 15k deposit from you (so you're putting 30k deposit down together on your new place)

whats the problem? his debt will be paid off. its often a condition of the mortgage that debts are paid off by other sales (this happend to me a couple of years ago but the debts couldnt be paid until i sold my property), i just had to promise to pay the debts off within 60 days of completion. however they were only about 5k or so i think (cant remember now)

mind you, where did the debt come from in the first place? are you worried about his ability to manage money?

BitterAndTwisted

DO NOT give him any of your money to pay off his debts! That's much, much too risky.

He should work on paying off all of his debts before you buy somewhere together. Joining your finances with someone in debt would be very foolish indeed. Getting himself out of debt should be seen as a demonstration of his commitment to you and your future together.

puddy

sorry, ive just seen your question about paying off his debts now with your money

DONT DO IT!!!!!!!!!!

anything could happen between now and then and you would have to enforce any private agreement in the courts if he decided to get funny and not pay you back

let him sort himself out between now and may, if there are concrete plans to pay off thedebt when he sells, then the mortgage company are likely to take this into consideration

hazyjo

Any mortgage offer will be reduced because of his debts - probably for more than he owes, due to the additional interest he'll be paying (plus the risk). It won't matter that he'd be clearing the debt with money from the sale.

I think you should do as suggested and pay off his debt (if you're happy with that!).

If you want to protect your £15k in case you don't move, someone on here might be able to suggest what a solicitor might be able to draw up for you. I'm really not sure how you could protect your money though as it's not like he's got £15k. He'd have to either take a loan to pay you back - and obviously there's no guarantee he'd get that, or increase his mortgage, or beg borrow or steal it! I'm not sure any legal agreement could force him to take a loan or increase his mortgage... it might be that a court would make him pay you back a set regular amount over however many years. Hopefully someone will be along to clarify.

Good that you'd be contributing the same amount in the end towards the property. Makes life easier!

Jx

hazyjo

Conflicting advice...

My hubby had around £10k debt, yet around £40k from the sale of his flat. We thought we'd be tying everything up together (selling his flat, my house, and buying a new house). All went t!ts up and ended up selling his flat first so thankfully he could clear his debt with that. We won't rack up any more debt as our lives have changed. His debt was from when he was on his own, not in a particularly happy place, and not as a result of overspending on clothes, car, living it up, etc. We've both taken a massive lifestyle check and are adamant we won't build up 'mindless debt'.

I suppose I was basing my comments on that. If your BF is someone who blows money like water and who lives beyond his means, yes, tread very carefully as you don't want him thinking you'll be bailing him out. I think the fact the deposits match (effectively £15k each), hopefully they won't be stretching to their absolute max. I do it can cost each individual far less as a couple than it can independently. I still had the washing machine on as much, and the telly, lights, etc. Half the bills with someone else sharing the outgoings.

If you feel he's 'learnt his lesson' and can manage money, or if it's debt from something specific, use your head and do what you think is right. Obviously we don't know either of you, so it's impossible to make a judgement on that side of things.

Jx

PPink

puddy wrote: »

i dont understand the question, you are buying a place together next may and he anticipates that at that time he will have about 15k in debt

he anticipates that at the time he will have 30k from the sale of his current flat which will be sold at the time you buy your place together?

so he's using 15k to pay off his debts and then 15k to put toward the new place, matching a 15k deposit from you (so you're putting 30k deposit down together on your new place)

whats the problem? his debt will be paid off. its often a condition of the mortgage that debts are paid off by other sales (this happend to me a couple of years ago but the debts couldnt be paid until i sold my property), i just had to promise to pay the debts off within 60 days of completion. however they were only about 5k or so i think (cant remember now)

mind you, where did the debt come from in the first place? are you worried about his ability to manage money?

All correct! What we were thinking if I gave him my half of the deposit there would be no debt and therefore better rates

He has under 30k of debt now we have snowballed and by May next year he will have 16k of debt left. I wouldnt give this money to him till like April so its all paid off and he has done his fair share of paying off his debts.

his debts came about when his split up with his ex of 10 years. They had saved up for a wedding and had to pay 10k, he also took on the mortgage himself which he has mangaged but took a few holidays and had some fun which went on the CCs and generally was living life to the max so racked it up.

I'm not worried about him getting back into debt as we will be sharing housing costs and were not saving up for a wedding. He also seems to have had his LBM and wants to get sorted

PPink

SuperBOB wrote: »

Has he looked at his credit rating?

His credit rating is good at the moment and when speaking to an experian person they said it should be excellent in 6 months time as long as he doesnt apply for any more cards etc

PPink

hazyjo wrote: »

Conflicting advice...

My hubby had around £10k debt, yet around £40k from the sale of his flat. We thought we'd be tying everything up together (selling his flat, my house, and buying a new house). All went t!ts up and ended up selling his flat first so thankfully he could clear his debt with that. We won't rack up any more debt as our lives have changed. His debt was from when he was on his own, not in a particularly happy place, and not as a result of overspending on clothes, car, living it up, etc. We've both taken a massive lifestyle check and are adamant we won't build up 'mindless debt'.

I suppose I was basing my comments on that. If your BF is someone who blows money like water and who lives beyond his means, yes, tread very carefully as you don't want him thinking you'll be bailing him out. I think the fact the deposits match (effectively £15k each), hopefully they won't be stretching to their absolute max. I do it can cost each individual far less as a couple than it can independently. I still had the washing machine on as much, and the telly, lights, etc. Half the bills with someone else sharing the outgoings.

If you feel he's 'learnt his lesson' and can manage money, or if it's debt from something specific, use your head and do what you think is right. Obviously we don't know either of you, so it's impossible to make a judgement on that side of things.

Jx

My boyfs debts were racked up to the same sort of things our OH's was as well. After years of staying in or working all the time to save for their wedding he wanted to live his life so I'm sure he won't rack them up again. We will also be sharing bills, costs etc so wont have to pay everything on his own like he has for the last 3/4 years and before that he was paying the majoirty.

He is determined he wont be having a credit card onces hes paid them all off. we will just have one which i will look after and we will only use it to buy things e.g. holidays (as your more protected using a CC) if we have the money saved up to pay it off straight away.

Experian_company_representative

Don't rush into anything. When the fixed rate deal ends the chances are you'll go onto the lender's base mortgage rate which if my current mortgage provider is anything to go by is likely to be a pretty low rate. Check this with the current mortgage provider.

James Jones