First Time Buyers - Couple, unequal deposits

WilliamJH

Hi all,

I am in the process of looking for a house to buy with my girlfriend. I've managed to save about £30k, whereas what she has saved is negligible.

I want to protect my deposit/share, and i'm aware that deed of trusts are a way to achieve this. There only appear to be two methods for separating the property ownership:

1. Agree that on sale the (assuming the house value does not drop) deposit is returned, e.g. 30k, remaining proceeds are split. Issue with this method is that any gains, which are made possible by the initial deposit, are split equally.

2. Ownership percentage proportions. E.g. 60%, 40%. I see a big flaw with this method though. For example, we immediately sell the house a year later, value is unchanged. Equity is 30k, the 30k is split 60/40, thus I would lose 12k.

Please correct any misconceptions i have made above, and advise on any better ways for achieving a fair split.

Thanks for your help,

Will.

pyueck

Method 1 seems fair. You assume the price will go up, it could go down.

What is your fallback plan if the price falls and on sale she cannot cover her share of the mortgage with the sale proceeds? Sounds like you would be on the hook for it, make sure you realise this.

Pixie5740

Say you're going to purchase a property for £100k and you put in a deposit of £30k. Why don't you get 30% of the selling price (after selling fees have been deducted) and the rest of the money split 50/50 if you've each been paying half the mortgage?

Your deed of trust should also include an exit strategy in case the relationship goes down the pooper. You don't want to end up like some posters who leave the property when the relationship ends and then 7 years later, after ignoring the issue, come on here asking for advice on how to force a sale.

carlx

Having had an Uncle fall into this trap (twice) before and lose out .... on a lot of money, i strongly advise you to not have your girlfriend on the deeds or mortgage.

I personally own my primary residence and although i have a girlfriend, i refused to let her be on the deeds or mortgage because just like you, although i am an optimist, i am also a realist and if this relationship were to collapse, i sure as hell won't be worrying about paying her off.

If you can afford it, pay 100% of the mortgage yourself. split bills for things you both use 50/50 (gas, elec, water, food etc)

The downside may be that your personal disposable cash every month is minimal but on the plus side you have protected your investment and your future.

If like in my situation, your girlfriend ups her game, getsa better job, saves a lot more and can fork out for a future deposit, then you can both go in 50/50 and you won't ever feel hard done by if it were to break down.

Hope that helps.

Randomjargon

carlx wrote: »

Having had an Uncle fall into this trap (twice) before and lose out .... on a lot of money, i strongly advise you to not have your girlfriend on the deeds or mortgage.

I personally own my primary residence and although i have a girlfriend, i refused to let her be on the deeds or mortgage because just like you, although i am an optimist, i am also a realist and if this relationship were to collapse, i sure as hell won't be worrying about paying her off.

If you can afford it, pay 100% of the mortgage yourself. split bills for things you both use 50/50 (gas, elec, water, food etc)

The downside may be that your personal disposable cash every month is minimal but on the plus side you have protected your investment and your future.

If like in my situation, your girlfriend ups her game, getsa better job, saves a lot more and can fork out for a future deposit, then you can both go in 50/50 and you won't ever feel hard done by if it were to break down.

Hope that helps.

Or just dump her

carlx

Randomjargon wrote: »

Or just dump her

Certainly would make things easier...

Errata

I am in the process of looking for a house to buy with my girlfriend. I've managed to save about £30k, whereas what she has saved is negligible.

The bald truth is that your GF can't afford to buy a house, with or without you. There will be a good reason for that, make sure you understand what it is.

pinkteapot

Errata wrote: »

The bald truth is that your GF can't afford to buy a house, with or without you. There will be a good reason for that, make sure you understand what it is.

How do you know that?

No, she couldn't buy alone because she has no deposit. But, she may be easily able to afford her half of the mortgage and bills. The mortgage could be cheaper than rent she is currently paying. She may currently be living alone and paying the bills by herself.

She may just have enjoyed spending her wages the last few years and is now settling down and will spend less. I used to spend a lot more when I was single.

Loan_soldier

If you love your 30k more than your girlfriend then why buy a house together?

And if your considering the possibility of going your separate ways then why buy a house together?

TrixA

carlx wrote: »

Having had an Uncle fall into this trap (twice) before and lose out .... on a lot of money, i strongly advise you to not have your girlfriend on the deeds or mortgage.

I personally own my primary residence and although i have a girlfriend, i refused to let her be on the deeds or mortgage because just like you, although i am an optimist, i am also a realist and if this relationship were to collapse, i sure as hell won't be worrying about paying her off.

If you can afford it, pay 100% of the mortgage yourself. split bills for things you both use 50/50 (gas, elec, water, food etc)

The downside may be that your personal disposable cash every month is minimal but on the plus side you have protected your investment and your future.

If like in my situation, your girlfriend ups her game, getsa better job, saves a lot more and can fork out for a future deposit, then you can both go in 50/50 and you won't ever feel hard done by if it were to break down.

Hope that helps.

I've heard that some lenders will insist that both partners be on the mortgage, if they're both living in the house and taking responsibility for paying it.

Personally I would probably go for option 1, but possibly with some sort of inflation allowance built in so you would get the real value of your deposit back if you decide to sell up. You're right that the purchase is only possible as a result of your deposit and you could probably devise some complicated formula that would recognise this fact. However, if you're moving in with your gf you're presumably seeing this as a long-term relationship, and assuming you're both contributing to the mortgage I think it would make sense for things to be equal after that. Otherwise it could become very complicated - what if down the track the two of you decide to invest in some home improvements, how would this affect the split of proceeds?

Mallotum_X

Why not just own it based on % put in

So if its say a 150k house - assumed joint mortgage.

you have put in £30k + 50% x 120k = 90k

she has put in 50% x 120k = 60k

Therefore, in this example you own it 60/40

work the figures though, on whatever the cost is. seems a fair way to do it.

if you sell in a year - with value unchanged you would get back your deposit - less your share of costs.