Money Moral Dilemma: Should I make mortgage overpayments ahead of my partner?

getmore4less

If you do it properly overpaying the mortgage does not change what you own just what you owe, and it is really simple to keep track.

skybluearmyontour

Had pretty much this exact conversation with my wife yesterday after meeting an IFA.

When we purchased our house, she was in a much stronger position than I was already owning a house, which she sold. Subsequently I only contributed 25% to the deposit. We have it in writing as to our % share. We split the mortgage payments (and everything else) completely down the middle. I am considering overpayments as I am in a position to do so, but if I am to do that then my % share of the property would increase....we would then get that in writing. She's in complete agreement.

Have you discussed with partner? If you are able to have a frank conversation - then it's not really a dilemma!

TBagpuss

Discuss it with your partner. You could, if you wish, have a cohabitation agreement drawn up which provides for you to each get back any over payments, out of the proceeds of sale, before the balance is split, or something of that kind.

You could also put the extra aside in another form of savngs and review things in another year or so. At that stage, ou and your partner may both feel tha the relatinsip is stronger and that you are both content to make extra payments and not to count evey penny, or you may both feel you would be more comfortable acounting for them, bith now and ater, for both of you.

There isn't single right answer, because it is about finding an arrangement which you both feel comfortable about and which both of you feels is fair.

If you do have a cohabitation agreement it is sensible to build in provisions to review it regularly, and also to try to think of potential variables.

For instnace, some couples chose to provide that their interests in a property will reflect their contributions but to build in provisions that if one of them is unable to contribute due to illness, or because they are on maternity or paternity leave of giving up / reducing work to care for children that they will be deemed to be contributing equally, which allows you to benefit from extra contributions you make, but also reflects the fact that couples support one another and that caring for children is important and valuable.

J_B

All thy worldly goods, I thee share?

;-)

Noviceinvestor

Firstly, do you own the property jointly, or as Tenants in Common? This can make a difference.

Most unmarried people choose to own a property as Tenants in Common because if something happens to one or the other, their share automatically reverts to their estate, and not to the other person. But that's another matter.

You need a Declaration of Trust to show in what proportion you each own the property, and how you will divide the asset if you split up. The ownership could be proportionate to match the amount of mortgage each of you is paying, though that might not be the only criterion to consider. Just decide on what you both think is fair, and reflects what each of you is contributing to your ownership, either in cash or in other ways (e.g. DIY, running the home, childcare etc).

A solicitor will draw up the DoT document for you. Believe me, it's worth the cost and effort - it could potentially save you a fortune in solicitors or court fees later on, and protect your share of your asset for your future.

Luxfl

Noviceinvestor has summarised it well. What you want isn't a cohabitation agreement, it's a Declaration of Trust. This can be set up in any number of ways, for example share of property's value equal to proportions of mortgage contributions made. We had ours made up to reflect the different sums made as a deposit. As my partner and I earn different amounts and also do different amounts of childcare, we've agreed that we'll pay proportionate to our salaries but divide the remainder of the value equally.

Don't listen to those who say if you're not married, you're not committed - that's rather 19th century and slightly insulting. We have a house and a family, we've just decided not to get married. Think of the money we saved by not having a wedding! Treat the DoT as an insurance policy, rather than as an expectation of breaking up. You don't expect the house to fall down, but you still have buildings insurance, yes?

mark.s_3

if you would rather discuss the issue with a bunch of strangers rather than your partner, you should probably look into dividing the possessions and property now! as clearly the salary issue bothers you, I do have one question will you be as concerned when your partner is earning more than you and the tables are turned???

getmore4less

skybluearmyontour wrote: »

Had pretty much this exact conversation with my wife yesterday after meeting an IFA.

When we purchased our house, she was in a much stronger position than I was already owning a house, which she sold. Subsequently I only contributed 25% to the deposit. We have it in writing as to our % share. We split the mortgage payments (and everything else) completely down the middle. I am considering overpayments as I am in a position to do so, but if I am to do that then my % share of the property would increase....we would then get that in writing. She's in complete agreement.

Have you discussed with partner? If you are able to have a frank conversation - then it's not really a dilemma!

There are better ways than trying to fiddle with the ownership, but then you may not have got that right in the first place depending ho you worked out the shares.

Fujiko

Noviceinvestor wrote: »

Firstly, do you own the property jointly, or as Tenants in Common? This can make a difference.

Most unmarried people choose to own a property as Tenants in Common because if something happens to one or the other, their share automatically reverts to their estate, and not to the other person. But that's another matter.

You need a Declaration of Trust to show in what proportion you each own the property, and how you will divide the asset if you split up. The ownership could be proportionate to match the amount of mortgage each of you is paying, though that might not be the only criterion to consider. Just decide on what you both think is fair, and reflects what each of you is contributing to your ownership, either in cash or in other ways (e.g. DIY, running the home, childcare etc).

A solicitor will draw up the DoT document for you. Believe me, it's worth the cost and effort - it could potentially save you a fortune in solicitors or court fees later on, and protect your share of your asset for your future.

Tenants in Common is a sensible option for all couples, married or not, but it is not the perfect solution for everyone in that it is up to each person to decide to whom they wish to leave their share. Usually of course this is to their surviving partner but there is nothing to stop them leaving it all to the Cats' Home! In our case we decided that the recipient would be our daughter so that after my husband died I now own the house jointly with her, and have left my share to her so that she will eventually (not too soon, I hope!) become the sole owner.
I always marvel at the complicated arrangements some couples have to make about financial matters, and am grateful that when I was married it was all so simple. The size of the mortgage was assessed on my husband's salary and his alone, so no problems about being able to pay it, he paid for this and all the household bills and my salary was used to equip the home until I stopped work. I wonder if the couples who seem to have such difficulty arraanging their finances inherit have also recognised how important it is to make a Will, since it is unlikely the house will be all of their assets and I think I am correct in saying that living together does not allow the same inheritance rights as married couples have

Danien

The most important thing is to discuss this with your partner, as there is no right answer applicable to everybody, it's what you and your partner decide is the right answer for you. Many relationships break up due to a difference of expectations in one or many areas of the relationship. Setting out and agreeing jointly to what both your expectations are for important areas of your relationship is key, and yes, putting it in writing if needed, and where necessary getting a legal agreement.

As an example, my partner and I have discussed our expectations at length during the 16 years we've been together, regularly returning to the discussion to ensure our expectations remain in sync and reviewing and negotiating when there is disparity. We don't have a written agreement, but we both very much agreed that we considered our relationship to be 50/50 straight down the middle, with everything - time, support, money etc. - going into a central pot. For us there was no way to put a value on the other things we bring to the relationship - for instance, my partner has mental health issues and I have been his carer for many years. I'm the only one of us who drives. We have both earned more than the other at various times. Recently I have been diagnosed with a degenerative illness and my partner has become my carer. We both are very non materialistic, and would be more likely not to take any perceived 'entitlement' at the end of a relationship (in fact this was how my partner was when his previous marriage ended).

But our solution isn't for everyone, that's why it has to be for each couple to decide together what their agreement will be on these issues. Don't come to us, talk to your partner.