Loan from girlfriend

raaaaa

I recently paid off my ex-wife to get her name taken off the house/mortgage, so the former matrimonial home & mortgage are now in my sole name.

In order to do this, my girlfriend (of 5 years) who now lives with me re-mortgaged her home (which is now rented out) to free up the cash to pay my ex off. I was unable to do so due to the level of my mortgage, and poor credit rating following the divorce. The amount of money she loaned me was a five-figure sum, so a substantial amount.

Obviously this was very generous of her etc, and I now want to ensure that her position is protected for both of our peace of mind. So I was just after some advice as to the best way to formalise this loan to minimise any risk to her. Would some kind of charge on my property in her name to the amount of the loan be enough? Or would we need to do some kind of legal agreement or contract/trust instead?

(I originally posted this in the Friends/Family part of the forum, but was advised that this board would be more suitable)

Any help gratefully received.
Thanks
Stephen

dotdash79

The best method is to have a "declaration of trust" drawn up, this should be done with a solicitor. Before you do so you need to deal with issues such as:
Amount of equity each person gets?
How to dissolve the agreement (person a buys person b out, sell the house)?
What happens with negative equity?
How are house price increases dealt with?

If this is a loan what are the terms of the loan is it a "forever loan" or are you paying her back? if you are paying her back how are issues dealt with above as you pay her back.

This needs a frank discussion between both of you. Whilst today maybe sunshine and happiness relationships can and do break down as you know.

But it's positive that you are looking at doing the right thing.