First Time Buyers - Couple, unequal deposits

pyueck

Mallotum_X wrote: »

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.

And what happens if the house sells for £120k after a year?

He loses his deposit, she loses nothing.

If the house sells for £180k after a year he makes an £18k profit, she makes £12k.

Sounds like this plan gives her 40% of the upside and none of the downside. Can I invest too .

fairy_lights

Lots of couples buy together where one is contributing more to the deposit than the other - I'm buying a house with my partner at the moment and the majority of the deposit is being gifted to us by my parents, I would never see that as a reason not to buy together or not let my partner be on the mortgage. We're going with option 1 and getting a deed of trust drawn up to protect my share of the deposit. Any gains made possible after selling the house won't solely have been made possible by the deposit, but also by the money, time and effort you both put in to looking after the house once you live in it.
Most couples will only be able to get the mortgage they need when their joint income is taken in to consideration so the OP buying on his own is probably a non-starter anyway.
OP, I think this is something you really need to discuss with your partner because whatever you decide to do needs to be something you are both happy with.

[Deleted User]

I would do it this way:

1, deduct sales costs
2, take your deposit back as a % of sale price after costs.
3, give the bank the balance of the mortgage
4, divide the remainder, half each (assuming you are paying half the mortgage each).

For example buy a house 100k with 30% deposit, sell 120k (after sales costs). You take back 36k, outstanding mortgage is by then 60k, that leaves 24k to split 12k each.

Also works if the value goes down: sell 80k after costs. You take back 24k of your deposit, the bank takes the other 56k, and you both have to pay off the balance of 2k.

pyueck

fairy_lights wrote: »

Lots of couples buy together where one is contributing more to the deposit than the other - I'm buying a house with my partner at the moment and the majority of the deposit is being gifted to us by my parents, I would never see that as a reason not to buy together or not let my partner be on the mortgage. We're going with option 1 and getting a deed of trust drawn up to protect my share of the deposit. Any gains made possible after selling the house won't solely have been made possible by the deposit, but also by the money, time and effort you both put in to looking after the house once you live in it.
Most couples will only be able to get the mortgage they need when their joint income is taken in to consideration so the OP buying on his own is probably a non-starter anyway.
OP, I think this is something you really need to discuss with your partner because whatever you decide to do needs to be something you are both happy with.

I agree with you however you are assuming that the house will sell for more than you bought it for. If there is a fall it will be your deposit that will cover this shortfall. If you are both happy with this fine, but just be clear on this in your mind.

pyueck

Cherry_Gale wrote: »

I would do it this way:

1, deduct sales costs
2, take your deposit back as a % of sale price after costs.
3, give the bank the balance of the mortgage
4, divide the remainder, half each (assuming you are paying half the mortgage each).

For example buy a house 100k with 30% deposit, sell 120k (after sales costs). You take back 36k, outstanding mortgage is by then 60k, that leaves 24k to split 12k each.

Also works if the value goes down: sell 80k after costs. You take back 24k of your deposit, the bank takes the other 56k, and you both have to pay off the balance of 2k.

Great in theory but if the person with the lower or no deposit doesn't have the funds to cover the balance then it is the person with the larger deposit that takes the hit.

[Deleted User]

pyueck wrote: »

Great in theory but if the person with the lower or no deposit doesn't have the funds to cover the balance then it is the person with the larger deposit that takes the hit.

All great theories have to bump up against reality in the end..... ;-)

Personally, I would like to agree with my partner what we both thought was fair, and cross any 'can't pay, won't pay' bridges when you come to them!

TrixA

Loan_soldier wrote: »

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?

I disagree, the reality is that a lot of relationships don't last forever, it is responsible and pragmatic to consider the various scenarios before entering into such an important financial transaction as buying a house together.

That said, if I was his girlfriend and he seemed unduly focused on what would happen in the event of a break up and making sure he got as favourable a financial outcome as possible, that might ring alarm bells.

Mojisola

WilliamJH wrote: »

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

Have the two of you lived together before? If not, do you want to be committed to a house purchase rather than rent together first?

Could you get the mortgage on your own? If so, some people deal with this by one person buying the house and paying all the mortgage. The other person puts the equivalent of half the mortgage payment into savings.

Assess how things are going after a while - if the relationship is good and the saving is regular and manageable, the second person can then buy into the house.

WilliamJH

Hi all,

Thanks for the responses, some good information.

We have lived together for 2 years previously renting, and everything was fine.

I also don't think its money grabbing to have a fall back plan, certainly when considering the amount of blood, sweat and tears that are required to save these sort of sums in today's world.

It does appear that there is no single "best" way to do this.

JimmyTheWig

Put the deposit money into savings. Earn as much interest as you can on it. Keep topping it up as much as you can.
Encourage your GF to top her savings up as much as she can, too.

Then when you are ready to commit to each other, buy a house together.