Lend 14K to Partner & Me

g60racing

Hey,

I am about to buy a house where I have put down a deposit and my partner has put down none.

I wish to setup my Mortgage deposit as a loan that is only payable on Sale of the house. We may even get married in a number of years so would then cancel this joint debt.

The loan needs to be from me, to my partner and me. Can I lend money to myself?

The reason for this is so that once the mortgage is paid up this loan should be paid off before we split the profits of the house.

I believe I have found a place that has a relevant form to set this up http://www.lawdepot.co.uk/contracts/loanagree/

Any advice would be gratfully recieved, these are great forums and I have been lurking for a while and have found it to be very infomative.

Jason P

[Deleted User]

It would probably be easier to structure this as a loan of 7k to your partner.

Labman_2

My suggestion would be to work out what % the 14k deposit is of the purchase price & take the same % out of the selling price when you sell & then split the remainder 50/50.

ie 14k deposit on 140k property purchase is 10%....if you then sell property for 200k, 10% is 20k & you split remaining profit 50/50.

Rafter

Labman,

A bit mean that g60racing gets to profit from all the house price increase or end up losing a disproportionate percentage if prices fall.

You are probably right that a simple loan agreement is all you need but no point lending to yourself.

I suggest the following.

I agree to loan you 7,000 to enable us to purchase a 50% share of property x.

I expect to receive no repayment on this loan but in return receive interest at the same rate as on the mortgage to be paid out of the proceeds of the house sale or when this agreement is cancelled by me.

So - if you sell in 3 years time and have paid 5% on your mortgage, you would take the 14,000 out plus 2,200 in interest. The balance of the proceeds, less teh mortgage would be split 50/50.

That way you are not out of pocket and you have both shared any increase in the house price fairly.

R.

Labman_2

Rafter, g60racing wouldn't be getting to profit from all the house price increase. g60racing would get the proportion of profit according to what he had 'put in' financially....as would his partner.