Risks of joint mortgage with partner

ljs_1985

I have a 40% share in a shared ownership property and I want to buy the rest to become 100% owner. The property has increased in value and means that I can't get a mortgage on my own for the whole lot. My partner is moving in with me in a few months and was simply going to pay me money and I would continue to pay my mortgage alone however now we are considering him going on the mortgage too so that we can afford to buy the 100%.

What are the risks involved in this? God forbid we broke up down the line, would he then be entitled to half of the property even though he paid no deposit, and the 40% Initially owned was mine? Could some sort of legal agreement be made that in the event of a split 40% is mine, and then the 60% share would be split between us so basically i'd be entitled to 70% and he'd be entitled to 30%?

Thanks and sorry if my questions are silly, I just don't understand house purchase and mortgages etc.

Richard_Webster

1. Check that your freeholder, housing association etc, will allow a transfer to joint names.

2. You are better to have a legal agrement than not having one, but please understand that in the worst case scenario such agreements have to be enforced and that can costs a few £thousand and takes time. Having an agreement just means it costs less than otherwise.

Do not accept some quick standard trust deed for £50. Both of you need to make sure that you each fully understand the implications of it and what should happen in all kinds of possible future circumstances.

Too often couples enter into some quick agreement which they think they understand and then when there is a breakup each has a different view as to what is meant. One may be right and the other wrong on the legal interpretation, but the one in the wrong gets mighty upset that they were taken for a ride and conned into something they didn't understand, so they resist, even if ultimately the law is not on their side.

In extreme caes, things can happen like one going off to the other end of the Earth with no frowarding address. The person left in the property can't sell it without the other's signature or an expensive court order. Or at the other extreme, the person staying in the property has the advanatge when the other walks out and wants to buy with a new partner, only to find that he/she has to get off the existing mortgage and buy out the one staying, who can then effectively dictate terms.

So the moral is make sure that you both know what will happen if the property goes up or down in value, if one party doesn't contribute to the mortrgage and other outgoings as the agreement says he/she should, etc, etc.

Entering into joint ownership of a property (particularly with a mortgage) is a pretty serious commitment in terms of trust. If you are thinking things might go wrong then how much do you trust each other and how strong is your commitment to each other?

G_M

Joint property purchase can be more of a commitment than marriage.

If you're not commited enough for marriage yet, then you're not commited enough for joint ownership.

penguingirl

G_M wrote: »

Joint property purchase can be more of a commitment than marriage.

If you're not commited enough for marriage yet, then you're not commited enough for joint ownership.

What about those of us who are committed enough for marriage but have made a deliberate choice not to do it? I'm in my 30s and the majority of my friends who own properties have done so without being married. Some have even had children out of wedlock too. We bought our first home when we were 23 and had no desire to get married to do it (and in reality couldn't afford both!). I'm not saying people should buy houses at the drop of a hat without thinking about, but I think it is possible to make the commitment in a grown up and adult way without a ceremony. We've always had open discussions about how we'd divide things if they went wrong, doesn't mean we expect them to! But I guess we've seen enough married and unmarried couples get themselves in knots over it.

OP - look at the difference between joint tenants and tenants in common. Your suggestion of the of the dividing of equity sounds sensible, but think about scenarios such as negative equity.

Kynthia

penguingirl wrote: »

What about those of us who are committed enough for marriage but have made a deliberate choice not to do it? I'm in my 30s and the majority of my friends who own properties have done so without being married. Some have even had children out of wedlock too. We bought our first home when we were 23 and had no desire to get married to do it (and in reality couldn't afford both!). I'm not saying people should buy houses at the drop of a hat without thinking about, but I think it is possible to make the commitment in a grown up and adult way without a ceremony. We've always had open discussions about how we'd divide things if they went wrong, doesn't mean we expect them to! But I guess we've seen enough married and unmarried couples get themselves in knots over it.

OP - look at the difference between joint tenants and tenants in common. Your suggestion of the of the dividing of equity sounds sensible, but think about scenarios such as negative equity.

I noted that G_M said about being committed enough for marriage not that you should be married. To me that means whether you choose to marry or not it's best to be at that point of commitment in your relationship before owning a property together. However as with many things and not just property ownership, you may need other legal documents in place to replace the protections and procedures that marriage grants

SG84

Before me and my wife were married, we had a trust deed in place on our first property. The reason for this was because of the different amounts of deposit we contributed, I put in £5000 where she put in £30000 and her deposit was left by her grandfather so I was more than happy with the trust deed.

Now we are married we have no trust deed.

Pixie5740

penguingirl wrote: »

What about those of us who are committed enough for marriage but have made a deliberate choice not to do it? I'm in my 30s and the majority of my friends who own properties have done so without being married. Some have even had children out of wedlock too. We bought our first home when we were 23 and had no desire to get married to do it (and in reality couldn't afford both!). I'm not saying people should buy houses at the drop of a hat without thinking about, but I think it is possible to make the commitment in a grown up and adult way without a ceremony. We've always had open discussions about how we'd divide things if they went wrong, doesn't mean we expect them to! But I guess we've seen enough married and unmarried couples get themselves in knots over it.

OP - look at the difference between joint tenants and tenants in common. Your suggestion of the of the dividing of equity sounds sensible, but think about scenarios such as negative equity.

Unmarried couples, no matter how committed they are to each other do not have the same legal rights and protections as married couples. Quite rightly so since marriage is really just a contract and if you don't enter into the contract then you cannot expect to be protected by the law.

Also, a lot of mortgages last longer than many marriages.