What if things don't work out........?

andrewm1981

I'm in the process go getting a mortgage with my girlfriend, total cost is £310k, I'm paying deposit of £70k, the rest is on a joint mortgage. (With a split of 60/40 equity).

Hypothetically, what would happen if we split up?

I could afford the mortgage on my own, just, so would I just give her the equity she's owed, then a transfer of equity?

Or would it go back to the underwriters who would check my affordability then I'd have to go through the whole mortgage process again?

Obviously i hope this doesn't happen, but I'm a worrier!

Thanks

Andrew

Let_Us_See

Yes, you are more or less correct. The lender would have to release your girlfriend from her mortgage obligation and this is only likely to happen if
you meet their affordability criteria. When you mention a 60/40 split I assume you refer to a Tenants in Common agreement?

Foxy-Stoat_3

andrewm1981 wrote: »

I'm in the process go getting a mortgage with my girlfriend, total cost is £310k, I'm paying deposit of £70k, the rest is on a joint mortgage. (With a split of 60/40 equity).

Hypothetically, what would happen if we split up?

I could afford the mortgage on my own, just, so would I just give her the equity she's owed, then a transfer of equity?

Or would it go back to the underwriters who would check my affordability then I'd have to go through the whole mortgage process again?

Obviously i hope this doesn't happen, but I'm a worrier!

Thanks

Andrew

You should do a Trust Deed now that states you get back the £70,000 THEN split the mortgage.

Your lender will need to assess your affordability on the outstanding mortgage then offer you a mortgage, if you need to make a lump sum payment to the possible EX then that will need to be added.

She signs a "Transfer of Equity" form and also a form to change the Deeds. You will pay fees for the mortgage and solicitors.

If you have worries now, REAL worries that the relationship is rocky then don't do it.

L|x

If you do tenancy in common and get a trust deed to specify the shares, and you can afford buying her out then yes, it should not be that difficult. The cost of doing the transfer of equity is something like £500-£700 (legal & lender fees) and you obviously need to pay her equity she's after.

The "fun" starts if you have kids together and then split.

Let_Us_See

Wow. Mortgage advice, plus an Agony Aunt!

andrewm1981

Thanks for your replies,

Yes, I meant tenants in common, but I didn't think about the 60/40 split after the £70k. Is a trust deed something the solicitor can draw up?

I guess I'm just having some cold feet before such a big purchase.......

I'm sure things will be fine :-)

Foxy-Stoat_3

Yes, speak to your solicitor about a Trust Deed.

L|x

Yes the solicitor does it for you at the time of purchase and the deed specifies who contributes what to the purchase and mortgage payments etc, and also who owns what shares. It is up to you to decide who owns what shares, but the solicitor can help suggest an 'equitable' arrangement.

amnblog

Get a trust deed done.

Keep yourself in a position where you can be underwritten on the mortgage on your own.

That way you are protected.

getmore4less

Loads of threads on how to not do this.

The best way is by equity shares which works for all values, value going up and down.

The other where you get your deposit back first is in efect a loan to the other party interest free and does not reflect the true situation.

If you search I have posted the details numerous times.
.


For a £310k place with a £70k deposit, paying 50% of the mortgage each

the equity split is £120k:£190k or 38.71% and 61.3

on sale you split the procceds at that ratio and then pay of 50% each of the mortgage.

any overpayments are 50:50 ( for unequal overpayments you recalculate the mortgage % NOT the equity)

any improvements/maintenance is done on the equity split.


WARNING: a lot of solicitors are no good with numbers.

getmore4less

Foxy-Stoat wrote: »

You should do a Trust Deed now that states you get back the £70,000 THEN split the mortgage.

This is not a good idea as it does not reflect the true equity/risk

It is the same as giving a £35k interest free loan to the other person and the share would need to be 50:50 if the mortgage is being paid that %.

Having a different % means that one party is not treated fairly if prices go up or down.