Mortgage advice

MortgageSeeker2018

Hello

I am saving for my first home. Will have saved £20k soon. As I understand it, most banks will lend a maximum of 4 times income. For me alone earning £20k, that's £80k plus £20k deposit, totalling £100k property value. I don't think I would be able to buy much at that price. My partner earns around £16k, so that should mean more offered by the bank. My question is regarding ownership. If I am stumping up the entire deposit, and I would like to include my partner's salary in the mortgage application, does that mean 50/50 ownership? Bear with me, I'm not an expert on this...

kingstreet

It means joint mortgage and typically joint ownership.

How you split the equity in a 'tenants in common' split with a deed of trust is up to you.

pink_pirlie

I am putting 95% of the deposit for our new house
So we have a deed of trust which states I own 95% of the first 30% and partner 5%. And any additional equity will be shared 50:50 as we are splitting everything else equally.

The solicitor asks you how you want to split the equity when you go through conveyancing. Just make sure you are aware to ask and also ensure you both fully understand the implications of anything you put in writing.

Hopefully you will never have to use it but it is much better to agree what would happen in the worst case scenario when you are happy and getting along than later down the line.

juniordoc

Myself and my partner also paid the deposit equally but the repayments 50:50 and have an agreement drawn up that details this.
Just be sure of your commitment to your partner as it can be easier to get out of a marriage than a mortgage. Make sure your savings are protected.

MortgageSeeker2018

Thanks all. I think I have a better understanding of how it works now. So basically, if for example I put down 100% of the deposit, which represents for example 20% of the property value, I could ask my partner if she would be happy to let me have the first 20% of equity that the property gained over time. This would then be formalised through a deed of trust. Is that right?

pink_pirlie

MortgageSeeker2018 wrote: »

if for example I put down 100% of the deposit, which represents for example 20% of the property value, I could ask my partner if she would be happy to let me have the first 20% of equity that the property gained over time. This would then be formalised through a deed of trust. Is that right?

Pretty much.
Just ensure the wording is that you get 20% of the property sale value not the proceeds after you have repaid the mortgage on sale.

You may also want to discuss what was to happen if the property was in negative equity. Like who is reponsible for paying the difference and solicitors fees, etc.

I had to sell a house in negative equity after a relationship breakdown during the credit crunch. Not only did I lose the £20k deposit I put down but I also had to pay off the negative equity and all the solicitors and EA fees as he just left. After supporting him and paying 70% of the mortgage for the previous three years while he studied, i lost everything and my ex partner walked away with his finances in tact and no debt. It took me years of working two jobs to get myself out of that hole.

MortgageSeeker2018

Sorry to hear about that, but well done on getting it sorted, can't have been easy. Interesting point about negative equity, I hadn't considered that. MS