Adding Partner to Mortgage??

bongo

I need some advice about potentially adding my partner to my mortgage and what risks/costs are invovled.

Essentially I have a mortgage on a property of which I put in substantial equity as deposit and want to retain that equity. My girlfriend has moved in recently and pays rent as a lodger. However she feels that the money is dead money as it is going directly into my Mortgage and not providing her with any future equity.

Basically I am exploring adding her name when I re-mortgage in 2 months time. However I only want it to be the case that the money she contributes toward the mortgage from this point on is available to her as equity. I believe you have to be tenants in common to do this and agree with a solicitor the percentage contributions, is this right?

Of course I love and trust her but there are all situations that can happen like splitting up or even death, how would this affect the euqity if one of these scenarios occur, would she own a portion of the house and would I have to sell it to pay her off? Is there an easier way to do this as we are looking to save for deposit and move elsewhere in the next 12-24 months.

bongo

ha, I'm guessing no-one wants to attempt any advice here..... is it such a bad idea???!!

SandC

If it was me I wouldn't change anything until you have saved up the deposit for the new place in 2 years time.

Where was her money going before she moved in? Rent or did she sell a property of her own?

Everyone seems to be in such a rush with everything these days. Why is she worried about equity she may accrue now if she (probably) wasn't before moving in with you? Cos it's there?

kingstreet

- Remortgaging when you intend to move so soon may not be a good idea. The new lender may not have great products for a purchase or you may not wish to port some and have some on another offer.

- Tenancy in common only affects the shares on death. If you don't want your share to pass to your partner, go TIC. If you do, a joint tenancy would be best.

- You need to make an agreement to what happens to the proceeds of a sale in a profit and a sale in a loss. This can be done by deed with a solicitor.

- Leave it until you move and get it set up the way you want then. In the meantime, simply keep a record of what she pays and make an allowance for it then. The likely cost of a transfer of equity, around £500 would simply be wasted now.

antrobus

Adding her name to the mortgage isn't the issue per se, as that's a liability, it's adding her name to the 'deeds' as the legal owner of the property, but that's just being picky.

What I think the OP needs to do is to speak to a solicitor and get a deed of trust which sets out who owns what as regards the property. And yes if two or more people end up owning a property together, it may well come down to having to sell the property if one of them later wants out of the deal.

bongo

Ok thanks for the comments, some good points. I have to re-mortgage now as my current one expires in April, therefore I wanted to consider the options now as it may be easier/cheaper to add another name with a new mortgage.

From the feedback its seems it may be easier to get her to save a deposit seperately and make a note of current contributions.

kingstreet

What's the follow-on rate when your current offer expires?

Also consider a customer retention product from your existing lender, rather than a remortgage, as you may be able to get something without early repayment penalties.

Being stuck in a product when you want to move house may not be sensible.