Advice re buying house with partner

lisssa

Hi
Will try and not waffle ....

I'm 47 year old female , who own my own home ( mortgaged) and one daughter who is 23 , currently living at home but is planning to buy own property at the end of the year .
I have a partner who is 45 , been together 2 years and he has lived with me for just over a year. He has 3 children youngest of which turns 18 in December . They all live with their mum.
He has never owned a house , they previously rented .
He now has a good job salary circa 52k a year and only 'debt' is a car loan which has 2 years to run. When he first split with ex partner he did get in some debt and moved from rental to rental for a while and due to that on his credit rating he has a default for a late gas & electricity payment ( was 3 months late but settled in sept 2013). Apart from that his credit rating looks ok but his Experian credit score comes out at 750.

We are now considering buying a house together , with the understanding that the equity I would be putting into the property ( 114k) would be protected and in the event we split / anything happened to either of us , the first 114k would be mine and then everything else would be 50/50 - that's based on us splitting everything 50/50. I've been assuming we could have some sort of legal agreement drawn up to support this and as we are not married / all children are almost adults shouldn't be to complex ??

I work for a financial institution and my mortgage is currently with them , I met with the mortgage adviser yesterday just to get an idea of the options open to us and she advised the following :-

Based on my earnings / deposit the house we are looking to potentially buy , I could get the required mortgage on my own , without including my partners income etc

Based on his Experian credit score, she didn't believe he would be accepted , and said as a tough guide anything under 850 tends to fail the credit checks ( she didn't complete a formal credit score as didn't want to risk a decline against me as a joint applicant ).

Therefore I guess our only option is for me to buy the house just in my name( should we wish to still go down this road) but what I want to understand is if he does want to contribute 50/50 moving forward is there any sort of legal agreement that can be drawn up just protects both our interests - I want to protect my current equity and I would also want to ensure that even though he would be on mortgage / deeds he would be entitled to the 50% of the remainder of any further equity should anything happen in the future ?!

Additionally I would like to understand if there is any risk to either of us with this approach - I fully understand that if we were to split / he just walked away , I would be the sole name on the mortgage and totally liable for repaying it ( I could afford mortgage pymts on my own salary).

Finally are there any other options open to us ? Both of us are pretty sensible and want to do the right thing by each other but also ensuring our investments are protected . Might not seem very romantic and quite 'transactional' but we are very happy together but who knows what the future will bring . Oh and finally we don't intend on getting married - just no need !

Thanks in advance and afraid I have waffled 😂

Pixie5740

Find a different mortgage adviser ideally an independent mortgage broker rather than just some sales person at a bank who puts stock in the score generated by Experian rather than the credit history and affordability.

steampowered

Speak to a mortgage broker who is able to advise you on the whole market. Not just the products of a single bank.

His credit rating might be an issue for your bank. But it might be no issue at all for a different lender.

cashbackproblems

this is interesting position, how does the situation change if you were to be married would the deposit you put in still be protected?


What kind of agreement can be put in for couples ALREADY married and one contributes the whole deposit or the bulk?

trailingspouse

My concern is that you are wanting to take out exactly what you put in (in this case £114k). If you go your separate ways in, say, 10 years' time, you would have no return on your investment. It might be better to do it on a percentage basis - you put 75% of the purchase price in, you get 75% of the selling price out. That seems fair to me.

Pa_Ja

Previous posters strategy seems the most sensible and fair in that you obtain a % and not necessarily the amount originally put into the mortgage.
You may also want to consider what happens to your equity in death.
Would you rather your daughter receives your share or would you be happy for your partner to inherit the home / financial reward?
Seek a solicitor to draft up a will.

alex_163163

trailingspouse wrote: »

My concern is that you are wanting to take out exactly what you put in (in this case £114k). If you go your separate ways in, say, 10 years' time, you would have no return on your investment. It might be better to do it on a percentage basis - you put 75% of the purchase price in, you get 75% of the selling price out. That seems fair to me.

But if the OP is happy not to get a return, then the way she has suggested seems fair. I am in a very similar position and am doing the exact same thing as the OP suggested.
My reasoning was that the deposit money is coming from my current house sale. It isn't sat in a bank account gaining interest currently, so why should I make a return on it at the expense of my partner who is contributing 50% to the mortgage repayments.
As long as the OP thinks it's fair then I think her suggestion seems sensible.

Cakeguts

In the event you split up which you have to plan for even if it never happens you would I assume want to buy another house? If you only get out what you have put in and house prices in your area suddenly shoot up because it suddenly becomes desirable or something how are you going to buy another house?

The reason why it is done in percentages is so that you get out the same percentage as you put in which means that you should be able to buy something else if the value of the house rises significantly.

saajan_12

If you both want to sell at some point and property prices don't crash, then its fairly easy to pay off any mortgage and split the proceeds. However make sure your agreement now covers the following situations, when its more difficult:

1) Property sale price doesn't cover mortgage balance + your £114k. Unless partner has excess cash, you end up paying off some of the mortgage out of your £114k.

2) You split up and partner wants to move:
-> Can you agree on a fair house valuation, and pay off 50% of the remaining equity (after mortgage and your £114k) to partner?
-> You'd have to dip into savings or increase your mortgage.
-> Can you afford the mortgage alone?
-> Will partner agree to receive their share later when you can save up?
If no to all of the above then you'd have to sell up and move too.

3) You split and you want to move out
-> Could partner raise a mortgage and buy out your share of the equity + outstanding mortgage. Sounds unlikely given your large deposit, but if they do, would also need to transfer ownership so some legals involved.
-> If not, partner is forced out of his home (though this would likely be inevitable if you split up and don't share ownership together)


I'm probably making this sound scarier than it is, but make sure you agree this in writing beforehand and so there's no misunderstandings or 'how can you do this' when emotions are raised and you're splitting up.

lisssa

Hi
Thank you all for your comments , it has given me some very sensible things to consider and a potential way forward .
We will definitely seek the advice of an independent mortgage advisor and I will have a think about the % / return on investment option , additionally once this is agreed I'm definitely getting a will written as one of my priorities is ensuring my daughter benefits from my assets once I'm no longer here !
Saajan thank you for documenting those scenarios , I don't mind them scary at all lol it's real life and I definitely want to consider / plan for all the 'what ifs' as life doesn't always go to plan , and I have been very. Independent for a long time so this is a big ( and very important step) for me .
So nice everyone has been so practical rather than being told I'm unromantic or should be considering whether I'm in the right relationship. ( as I've seen many a time of the marriage / relationship board ) when people have asked similar questions so thank you !

cashbackproblems

how does the % work if there is unequal deposit but equal mortgage payments?

So for a 100k house, i put in 50k deposit, each pay 50% of mortgage. Divorce and sell for 200k, how would you set that percentage split?