Buying House with Partner - Deed of Trust

Gopes

My partner and I (we have a 1 year old son) have had an offer accepted on a house (hooray). I am putting up all of the deposit and will initially be meeting the entire mortgage payments. As such, we have taken the decision to buy the property in my name only. We have disclosed this in the application to the mortgage lender (HSBC), and are aware that she will need to sign a letter stating that she does not have a legal charge over the property should the lender need to repossess the property (i.e. in the event of arrears).

In reality, she is intending to return to work part time (I will cover the childcare costs), and so will be contributing (a relatively small proportion) towards the mortgage and bills. I am anxious that we draw up an agreement (I think this is called a Deed of Trust) to protect contributions that she chooses to make towards the property in the event we go our separate ways. That way, in the event that our relationship doesn't work out (we are engaged, and hope to get married in a year or two - house was more of a priority than a wedding), then we can work out how much I should pay her to buy out her contribution.

Broadly, the idea (in such an event) would be to have the house valued and subtract off the outstanding mortgage amount. We would then deduct the deposit I have put down along with the other purchasing costs. Whatever is left would belong to each of us in proportion to our aggregate contributions towards the mortgage. In no event would she have to make any further payment to me (i.e. in the event of negative equity) - in that case, she would just walk away.

In addition, I intend to take out life insurance to pay off the mortgage in the event of my death, and also write a will to leave her (and our son) the house.

I know that this is all very unromantic - we are very much in love, but I like to be rational about this sort of thing. Assuming we stay together, then all of this is redundant - but if things don't work out, I think it is simpler and less costly having the house in my name (given that I will be putting up all of the deposit, and probably 75% of the mortgage payments or more).

I realise that the sensible advice would be to go and see a lawyer - but we are keen to avoid the costs, and given the fact that what we are doing is conceptually very simple, an agreement should not be too difficult to draft up. My understanding is that as long as the document is clear and suitably signed and witnessed (and of course anticipates the various eventualities), then it should suffice.

Questions:
1 - Does the above seem reasonable?
2 - Is there anything obvious we have not thought about?
3 - Does anyone have an example / template of such a 'Deed of Trust'? It is easier to have a starting point, as opposed to starting from scratch...

Thanks for your views.
Gopes

DVardysShadow

1. No, this does not seem reasonable. You might see it as simpler to have the house in your sole name but I am seeing it as just more convenient for you. It won't be any cheaper - in fact doing it your way, I would be advising your partner to get her own independent legal advice, whereas if you went for the more normal Tenants in Common, I would think one solicitor would be adequate. So that is an extra solicitor's fee to budget for, unless you can strong arm your partner into not taking independent advice advice

2. Go Tenants in Common and use the Deed of Trust in conjunction with that, rather than as a side deal on your sole ownership

chilli_red

So while your good lady will be paying a relatively small amount to the mortgage as she will only be working part time, am I right in thinking that the time not spent working will be spent looking after your child???

Its not unromantic, its down right cheap skate material!! By all means draw up a deed of trust so that your deposit is protected but after that do you really not think it should go down the line??

Kynthia

I think it's very sensible to consider the implications of buying together when not married and nice that you wish to protect your partner's interests. I do think drawing up your own agreement is risky when talking about the most expensive asset you'll ever buy as you can't think of every scenario like a solicior would. You're already paying a solicitor to complete the conveyancing so why not get them to do the deed of trust?

Also if you have a child and are planning to marry, why are you not having your partner's name on the property? Is it because it's negatively affecting the mortgage in some way?

Gopes

I am sorry if my actions are perceived as being cheap (with the exception of trying to avoid a hundreds or thousands of pounds in solicitors fees) / unfair - I can assure you that this is not my intention. I am well aware that by buying the house in my own name, as opposed to jointly, my partner will be taking the risks (i.e. the possibility that I could e.g. "kick her out" in future, etc.). This is certainly not my intention, and this is why I am trying to build in some protection for her.

Sadly, the reality is that even before she went on maternity leave, her salary was less than 1/4 of my own. Using the rough 'income-multiple' rule of thumb (i.e. that banks will lend 4.5x single income or 3.5x higher plus 1x lower income) mean that the house we are buying comes across as affordable on my salary alone, but not jointly using the above rule of thumb.:think:

In addition, where as I have a strong credit rating (plenty of history of credit cards being paid promptly, with no missed payments, etc.), my partner is unlikely to have a good credit rating (never had a credit card or loan, as she does not like to live outside her means, as she sees it), and has not bothered to be on the electoral roll. Clearly with hindsight, she (we) should have addressed these - but it is too late now...

Accordingly, it seemed sensible to simply apply in my name, and then try to build in some protection for her further down the line.

In answer to specific questions / points raised:
a) Since our son was born, I have insisted on paying her (she didn't want this) a sum of money each month, which has allowed her to have money to spend as she sees fit. I will continue to do this going forward (i.e. if she returns to work, I will pay the childcare costs, or if she stays at home, i will pay her the same amount - in addition to covering all of our bills and living costs). It will be her decision as to whether or not to contribute towards the mortgage.
b) In answer to the point that we should simply split down the line, I do not subscribe to the view that e.g. Heather Mills was entitled to half of Sir Paul McCartney's fortune when they divorced. Similarly, if I am putting down a large deposit, and then paying 75-100% of the mortgage payments, I do not think that it is fair for her to be able to leave me at some point in the future, and expect to have a claim to half of any money left over once the mortgage has been paid off. I should emphasize that she agrees that this is ridiculous and does not want this - but of course, split-ups are emotional times, and can be very accrymonious...
c) When I outlined the situation to our conveyancer ("sadly" on the Countrywide Panel necessary for a HSBC mortgage) and asked how much they would charge for assisting us in signing up a Trust Deed, they explained that this was not something that they specialised in - and suggested we speak to a solicitor!!!

I have seen plenty of posts on here from couples where the relationship has gone sour, and who have vast difficulty in going their separate ways due to having joint mortgages / home ownership and /or one of the partners being unreasonable - presumably in all those cases, they were in love and trusted each other initially...

All I am trying to do is:
a) Protect the undeniable fact that I am putting the vast majority of the money in to this house; and
b) Enable us to both go our separate ways (which like I said, is certainly not something we are even remotely considering at this moment in time), in a fair and equitable manner and with a minimum of hassle...

Question:
Do "Tenants in Common" both need to be on the mortgage / land registry? If so, given that the mortgage application is currently in progress (waiting for a decision from HSBC), is it easy to get her subsequently added on to the mortgage / land registry post-completion?

I do appreciate everyone's views, and please don't think that I am deliberately trying to 'rip off' my other half, or take more than my fair share out of this (in the event of a separation)...
Gopes

louisa_84

We have a deed of trust in place. We had a very large deposit on our house [£175k] which was fully funded by my husbands parents through monies they had saved for him since birth. We have the deed of trust in place so that the inititial deposit is returned to my husband, and the remainder of the house value is split equally should we ever split. We did it as a figure rather than the % so we share equally any profit made through increase in value or whatever. I fully understand that my husband wanted to protect his inheritance and caused no issues between us at all.

embob74

I was going to say that should you ever split up you would have to take into account child maintenance to be paid to your partner and whether that cost would make you struggle to pay the mortgage.
But as you already pay her an amount each month then that base is pretty much covered.
I understand why you are doing it and it makes logical sense the way you organise payments to your partner due to the income differences but for some unfathomable reason I find it quite unnerving merely planning for a break up.
Perhaps when buying a house it should be a legal requirement to sort out who will get what should a relationship break down and then neither party would have to broach the subject - it would be compulsory to sort it out.

fannyanna

My Husband and I are in the process of purchasing a property and we had a meeting with our solicitor to discuss how to own the property (joint tenants or tenants in common with a deed of trust setting out shares). In the end we decided to own the property as joint tenants as it works for us. Whilst we weren’t considering the possibility of us divorcing our solicitor did say that a deed of trust wouldn’t be that much use if we did divorce.

Are you planning on marrying? If you do and then divorce I don’t think the deed of trust will give you the result that you’re looking for. I think any separation/divorce would be hugely complicated by the fact that you have a child. I don’t know much about the laws in this area but from what I gather the man normally gets scr*wed where there are children involved.

I really think you’d be wise speaking to a solicitor about this.

DVardysShadow

Gopes wrote: »

Question:
Do "Tenants in Common" both need to be on the mortgage / land registry? If so, given that the mortgage application is currently in progress (waiting for a decision from HSBC), is it easy to get her subsequently added on to the mortgage / land registry post-completion?

I do appreciate everyone's views, and please don't think that I am deliberately trying to 'rip off' my other half, or take more than my fair share out of this (in the event of a separation)...
Gopes

You have about the hardest situation here to do anything different. Countrywide are not capable of this work - but at least they have told you. If you had not declared partner and child as dependents, it might have jeopardized your mortgage application irretrievably, but as your partner is already mentioned, the worst it can do is get the application passed to underwriting for reassessment. Adding your partner on to deeds and mortgage after the mortgage is in place might be possible, but you are at the whim of the lender.

Plainly you have tried to do the right thing - but my concerns are that by cheapsakting on this, you seriously risk not actually giving yor partner the protection she deserves and that you are overly concerned about protecting your own interests.

You would have done better to come here for the advice before you put the offer in.

Gopes

OK, we have just had the call from HSBC to confirm that our (my) mortgage application has been approved :j. This is fantastic news, as I know that HSBC are notoriously conservative with their underwriting...

To recap, the intention had been to have the mortgage in my name only, and have a separate Deed of Trust to protect contributions my partner makes towards the mortgage payments.

We had made the application in my name, as I was (incorrectly it seems) under the impression that the fact that my partner was only working on a casual basis, and had recently (in the past month or so), ended her period of maternity pay, combined with the fact that she doesn't have any 'credit history' to speeak of would make it difficult for us to get a joint mortgage. N.b. I fully disclosed her existence and that of our son to HSBC in the application.

Having read your comments, I can see that it would have been better to have applied for a joint mortgage (albeit without depending on partner's income), and become tenants in common, with a Deed of Trust to reflect the relative contributions towards deposit and mortgage payments... Oh well, my fault for not researching properly...

Questions:
1 - Would HSBC be likely to consider altering our application at this stage, to include my partner's name on the mortgage - or would this be likely to be a bad idea, considering they have already approved the application based on my income alone?
2 - Is there any way we can be Tenants in Common, whilst having a mortgage in my name alone?
3 - Alternatively, would it be better to add my partner's name to the deeds after the purchase - what additional costs / capital gains / stamp duty implications would there be, in doing this?

I realise that these are really questions we should have explored before this - but no point crying over spilt milk...

Ultimately, we want to ensure that our relative contributions are protected, and that this is sorted out as cheaply and efficiently as possible. Of course, hopefully we will remain together until 'death do us part', in which case this all becomes rather academic.

Thanks again for all of your comments and suggestions...
Gopes

Gopes

Anyone have any thoughts?