Almost at exchange, Tenants in common? or joint?

chopper78

At the moment I am the sole owner of my current house, but have just bought a property with my partner but not exchanged yet. We are unmarried but do have a child. How sinful.

Despite the fact that the entire deposit on the new property will be from my savings and the sale of my house (I earn about six times as much as she does) and the DD for the mortgage will be coming from my current account rather than the joint account, we're still going Joint Tenancy. After all, we're buying a house and we have a boy because we have no intention of splitting up.

penguingirl

Dave_6 wrote: »

If we split and agree to sell, one would probably move out straight away. House could take a year to sell and mortgage would still need to be paid. But person whos moved out wouldn’t want to pay 50% of the mortgage as they aren’t getting the benefit of living there. Out of our £700 monthly payment £450 pays interest, £250 goes on actually reducing the loan.
So I guess in that situation the person staying in the house would pay maybe 75% of the mortgage (£525) and the person who’s moved out would still need to contribute as the mortgage total is still going down so maybe 25% and so (£175). That way the mortgage amount is reducing by £250 each month and both parties are contributing to it going down.
That way person whos moved out is still contributing, although they don’t live in the house the mortgage is still going down each month and so as they benefit when house is sold they should still contribute to mortgage going down.

Personally if I were in that situation I would want to base the payments on the interest and capital amounts- so for example if I moved out of my current property and we decided to continue paying mortgage as we are I would agree to pay half the monthly capital cost, but not any of the interest (as I would presumably be paying rent elsewhere). Or alternatively we'd switch to interest only and he'd pay it all (or vice versa if I was there). In my head I see the capital payments being an investment in the property whereas the interest is the cost of living there (akin to rent), so I wouldn't be willing to cover his 'costs'.

My partner and I were similarish to when we bought our house- we had fairly similar savings (although not exactly). We decided to be joint tenants but agreed to match each others deposits and have completely split everything to do with the house (everything comes out the joint account and we both put in an equal amount each month). But we went for an offset mortgage and both have our savings and current accounts linked to it (in addition to the joint accounts), that way our savings is reducing the interest on the house, but not paying off the mortgage. And we've both been clear that the other one is welcome to move their savings to a different account if that became a better option (so for example OH is looking at shares at the moment and that would reduce the value of the offset). If we split up we would sell the house, split it 50:50 and not fight over whose savings are whose. But I know this arrangement wouldn't suit everyone, but it suits us as our salaries are fairly well matched, but things would have to change when we have kids (although actually we both want to go part time when we have kids, so maybe it won't change that much!)

System

heathcote123 wrote: »

Thats the spirit

Why wait? Split up now and save the fees.

Dave_6

It sounds like the best option is probably to go with the most common method, joint tenants.

But then maybe for us to make our own document and both sign it so that if we ever do split up we have already agreed on the terms and it doesn't break out into a big arguement.
Similar to the agreement I've posted I guess but maybe change the 25% mortgage payment to be smaller for the person who has to move out.

Seems pointless to pay a solicitor a fair amount to write up a detailed tenants in common deed if it's not really meant to be about what happens if you split up anyway....

RAS

Hi

You really really do need to decide what happens when you split up, even if you never split up and whether you go to joint or TIC. if you go for joint then you need a trust deed covering eventualities. Make sure you cover what happens if the house loses value as well

Why? Because these forums are littered with people with good intentions whose relationships have failed and whose personal and financial futures are in ruins becuase they did not sort this out before they bought a house together.

What do you (and OH) want to happen if one person dies?
What do you ( and OH) want to happen if you split up with profit?
What do you ( and OH) want to happen if you split up with a loss?

If you cannot discuss this and reach conclusions, you should not be buying a property together.

Johnhowell

Following my experience, I would suggest:

Tenants in Common - probably unequal shares although the difference is minor - especially if the mortgage is paid 50/50. For ease - Tenants in Common equal share 50/50 on HM Land Registry form

Create and sign a Deed of Trust for the treatment of the property;
Create and sign a co-habitation agreement;
Create, sign and register Lasting Power of Attorneys - for the event of mental incapacity;
Create and sign Wills - this will outline your wishes for your "half" of the property.

With good advice from a family/relationship solicitor these will cover all possible events which will allow ease of enacting by those left behind.

I suggest that a solicitor is NOT assigned as an executor for the wills as well as attorneys for the LPoA. Pick family members or very good friends.

Otherwise do nothing, be joint tenants and leave the aggravation a for time in the far future or even when you are not around. Spend some money now could save thousands later - experienced this.

Obviously, this will be very much complicated if/when children come along. All the above documents will have to be reviewed and re-written in this case.

Good luck,
John

Dave_6

Thanks guys, we are going to get a simple declaration made by the solicitor, is going to cost £180 inc vat

Saves alot of additional stress if we ever did break up

Dave_6

Think we will go for something similar to this



How much deposit each is contributing, NH has put 16k towards the purchase, DS put 11.6k. Of the deposit this means NH has put in 58%, DS 42%

The % of the mortgage that each is going to pay, each person will pay 50% of the mortgage payments aswell as 50% of any household bills + maintenance costs.


How you will split any equity (or negative equity) when you stop the mortgage or sell the property,

If 25k or over in equity, first 25k to be split 58% to NH , 42% to DS, any equity over 25k is split 50/50
If less than 25k equity, split 58% to Nicola, 42% to DS
If in negative equity by less than 25k then DS will be liable for paying 58% of the negative equity, NH would be liable for 42%
If negative by over 25k then first 25k DS is liable for 58%, NH 42%. Figure over that split 50/50



How to value the house if you split & want to sell. , We will get a minimum of 3 estate agents valuations, agreeing on an average price taken from the valuations to then proceed with.

What happens if one of you dies., When house sold equity is split 50/50. 50% to living partner, 50% to the deceased family. However if in negative equity living partner is 100% liable.
Provide details of parents names on both sides so its clear who would in the family get the 50%.


What you do if you split, Until the house is sold or one buys the other out then each month the person who moves out pays 50% of the capital, person staying in house pays 50% of the capital but also pays 100% of the interest.
If the mortgage is changed at time of split to be interest only then person staying in the house pays the full 100% of the mortgage


What you do if you split and one doesn’t want to sell, person who doesn’t want to sell has 6 months to buy the other out + change mortgage otherwise it goes up for sale.
If buying out others share then the house would need to be valued by minimum of 3 estate agents, average price then used against mortgage figure + to work out the equity.

Buy out equity values worked out same as above sums. First 25k , 58% in NH favour, 42% to DS. Any equity over 25k split 50/50.
If house is sold following a split then equity shares are as above + any selling fees are split 50/50

SuzieSue

Just one other scenario to consider - what if you split but you both want to buy the house.