House Ownership Advice

BusDriver320

Hi,

This is probably slightly unusual and as a result I’ve not come across anyone in a similar situation.

My partner and I are looking to buy a house together. She’s in the enviable position of owning her own house without a mortgage. I’m in the slightly less enviable position of not being left with very much equity after recent divorce; however, I do have a fairly reasonably well paid job.

She could buy the house we're considering outright without my help but then that would leave me as little more than a lodger. I did consider one option might be for her to sell her house, keep 30% of the proceeds and then for me to take out a mortgage for the outstanding 30%. I would obviously be paying interest on a mortgage that jointly we don’t really need.

Another option might be for her to buy the house outright and I repay her the equivalent of the 30% mortgage on a monthly basis but that would presumably make the division of assets should we split extremely complicated. Worse still, I could end up with nothing.

I could buy another house on my own as an investment but again I would be no more than a lodger in my partner’s house.

Anyone come across this sort of situation before? Essentially I want to ensure that we come up with a plan that is fair to both her and me, protecting us both equally in the event that we go our separate ways in some point in the future.

Thanks for reading his far!

overlyconcerend

BusDriver320 wrote: »

Hi,

This is probably slightly unusual and as a result I’ve not come across anyone in a similar situation.

My partner and I are looking to buy a house together. She’s in the enviable position of owning her own house without a mortgage. I’m in the slightly less enviable position of not being left with very much equity after recent divorce; however, I do have a fairly reasonably well paid job.

She could buy the house we're considering outright without my help but then that would leave me as little more than a lodger. I did consider one option might be for her to sell her house, keep 30% of the proceeds and then for me to take out a mortgage for the outstanding 30%. I would obviously be paying interest on a mortgage that jointly we don’t really need.

Another option might be for her to buy the house outright and I repay her the equivalent of the 30% mortgage on a monthly basis but that would presumably make the division of assets should we split extremely complicated. Worse still, I could end up with nothing.

I could buy another house on my own as an investment but again I would be no more than a lodger in my partner’s house.

Anyone come across this sort of situation before? Essentially I want to ensure that we come up with a plan that is fair to both her and me, protecting us both equally in the event that we go our separate ways in some point in the future.

Thanks for reading his far!

I suggest she 'loans' you the equivalent of 50% of the house price and you 'buy' the new house 50/50.

Set the loan up officially to say the interest on the loan is linked to the increase in value of the house (minus the cost of any refurbishments unless you also contribute 50/50) and should you split before the loan is paid off you can surrender that proportion of the equity to pay it in full.

BusDriver320

Thanks Overlyconcerned. Have you seen this arrangement actually work? I’m not very good at this sort of thing. Could you expand on how it would work if we were to split before I had repaid the loan?

overlyconcerend

BusDriver320 wrote: »

Thanks Overlyconcerned. Have you seen this arrangement actually work? I’m not very good at this sort of thing. Could you expand on how it would work if we were to split before I had repaid the loan?

Yes in so much one person owned the house already and the other person was signed onto the deeds in return for signing an agreement to repay the value of half the house over the next 20 years at an agreed rate.

If you split and you've repaid half the loan then you sell the house and your partner gets her 50% plus 25% of your half to cover the outstanding loan. You get your 25% to put down on another property.

You're basically just buying in shares of the equity but from your partner rather than from the bank.