Buying a house - what is a fair split between partners?

DVardysShadow

Given the romantic nature of the partnership, there is no right answer to this. But I would suggest:

Your equity is 25%. The mortgage is 75%. If she takes responsibility for 50% of the mortgage, her equity share is 37.5% and yours is 62.5%. If you need to split, you take 62.5% of the whole selling price and she takes 37.5% and from your shares you each pay 50% of the mortgage.

The down side is that if house values have dropped when you split, she will end up owing money. But, hey, if you take equity, its value can go up or down and if you take equity on a loan, you end up responsible for any losses.

If you discuss this with her and she is unhappy about the downside risks, then equity is not for her.

andy.m_2

risky, but with the current market stability may it be worth the OP taking back the first X'000 £s rather than a percentage share?
Then whatever losses are left they split 50/50?

Panda78

I'm in the same situation, putting down about 30% of sale price for the deposit as my partner does not have a good enough work history and credit rating to qualify for a mortgage. As long as i have my deposit protected and will get that amount back, i'm not bothered about what else i may lose in future, that's life unfortunately (i'm the female BTW). Only way of avoiding that is to stay single, as tempting as that is at times!

DVardysShadow

Panda78 wrote: »

I'm in the same situation, putting down about 30% of sale price for the deposit as my partner does not have a good enough work history and credit rating to qualify for a mortgage. As long as i have my deposit protected and will get that amount back, i'm not bothered about what else i may lose in future, that's life unfortunately (i'm the female BTW). Only way of avoiding that is to stay single, as tempting as that is at times!

Greedy greedy. You are putting down 30% and if prices drop, you expect 30% of current prices back - putting the losses on your 30% back on your partner? I say if you put in 30% and you expect 30% back if prices rise, then you should take 30% and stand the loss if prices fall.

themull1

I would say she would get nothing as she will be a lodger in your house.

Panda78

DVardysShadow wrote: »

Greedy greedy. You are putting down 30% and if prices drop, you expect 30% of current prices back - putting the losses on your 30% back on your partner? I say if you put in 30% and you expect 30% back if prices rise, then you should take 30% and stand the loss if prices fall.

I'm not looking at any rise or fall. I'm putting down £80K, that's a huge amount of money which i have earned myself over many, many years in order to get on the ladder, i'm not losing any of that, thank you!

I'm having a document drawn up which states that i get £80K back in the event of a split, whether our property value falls or rises. If my partner doesn't like it, he doesn't have to sign. At the end of the day, he is not putting a penny towards the deposit and we are not married, so i have to protect my own future.

greenjellybean

Panda78 wrote: »

I'm not looking at any rise or fall. I'm putting down £80K, that's a huge amount of money which i have earned myself over many, many years in order to get on the ladder, i'm not losing any of that, thank you!

I'm having a document drawn up which states that i get £80K back in the event of a split, whether our property value falls or rises. If my partner doesn't like it, he doesn't have to sign. At the end of the day, he is not putting a penny towards the deposit and we are not married, so i have to protect my own future.

You are like me Panda. I would also be happy just to secure my deposit but then I think if the property increases in value, why should my partner make £10k (for example) when he hasn't really done anything for that? That makes me sound very mercenary but really, he has only been able to live in this nice house because of the money I have previously saved. Who are you getting to draw up your document?

DVardysShadow

Panda78 wrote: »

I'm not looking at any rise or fall. I'm putting down £80K, that's a huge amount of money which i have earned myself over many, many years in order to get on the ladder, i'm not losing any of that, thank you!

I'm having a document drawn up which states that i get £80K back in the event of a split, whether our property value falls or rises. If my partner doesn't like it, he doesn't have to sign. At the end of the day, he is not putting a penny towards the deposit and we are not married, so i have to protect my own future.

greenjellybean wrote: »

You are like me Panda. I would also be happy just to secure my deposit but then I think if the property increases in value, why should my partner make £10k (for example) when he hasn't really done anything for that? That makes me sound very mercenary but really, he has only been able to live in this nice house because of the money I have previously saved. Who are you getting to draw up your document?

If you were both single and doing it on your own, you would take all of the rises and all of the falls. If your respective partners enable you to buy with bigger mortgages, then the rises and falls will potentially be larger.

At the moment you both seem to be arguing that because you bring equity, you should suffer none of the falls although you might share some of the gains. It ain't reasonable to put all the losses onto the other partner, although they should certainly share some of the pain.

AlexMac

Wow- what a great thread! And I'm sorry I'm coming into this post 2 days after you started it because I may be too late;

in that if your lover, to whom you say you are 'pretty committed' (or as some of the posts above say- the 'lodger' who does you favours by cooking, cleaning, financially contributing and sharing a bed?) is also reading this she's probably already having second thoughts about shacking up with you....

a bloke who wants complete strangers to confirm his view that as she is less well off (unsurprising for someone with a history of one failed marriage- as in my experience divorce is fianancially difficult for both sides) she should get little equity out of the house if you should split.

Do wHat you want-and take the quasi legal advice, above if you can take her happily with you on this course of action. But although she's reluctant to wed (are you?) you might just consider that if you were to ever marry, you'd in all likelihood lose 50% of your equity to her in the courts in the event of a split, whether or not you'd been the bigger earner.

After my separation from a 1st wife, I was in a similar position to her, in that my girlfriend owned a house and I was skint. Luckily, she took the long view, and after 25 years together, we've traded up from a modest Victorian terrace in a marginal suburb, to a jointly-owned 4-bedder in an upmarket London area; by pooling resources and committment. When we eventually married after 15 years, it wasn't because we needed the state or church to re-inforce our relationship, but rather to tidy up property, pensions and inheritance.

You could suggest that she goes alonhg with some of the advice above and agree that you buy 'your' house, and abandon any hope of legal rights (no such thing as a common law wife) so that you could turf her out without a penny if you fall out. Or perish the thought- that your relatives could evict her on inheriting the house if you should die without a will . But if the relationship's worth anything to you, you might have to meet in the middle with a mutually negotiated 50-50, 60-40, 30-70 agreement or whatever.

You could do this two ways:

- either via a will (which would be useful anyway) or

- by asking your solicitor about the two forms of tenure which are the alternatives to you owning the whole house- ‘joint tenants' or ‘tenants in common' and wheter this is influenced by the fact that the mortgage is in your name only (which always used to be the case before the emancipation of women or when traditionally only men had jobs, bank accounts and mortgages and did not prevent wives sharing ownership). Check the law, but I think that...

I assume you won't even want to countenance the former (‘joint tenancy' as this would give her an equal share and mean that she'd inherit the whole property if you died first) but you might want to cememt your relationship by considering the latter ('tenancy in common', which would give her ownership of a defined % share.

And sorry if I sound challenging- I think you need to forecast how the relationship will pan out, and ask the lawyers to structure the money and property accordingly- with a will or Land Registry tenure election! Good luck.

Kynthia

Life would be simpler if people got married before committing to each other financially to the extreme of a property and mortgage.