Protecting deposit when adding my partner to the mortage

BirdisBlue

Hello,

I bought my first home around 12 months ago. The house is in my name only and I am currently living in it with my girlfriend of 5 years.

I worked hard and saved for a while and managed to put down around 40 thousand for a deposit. My girlfriend is terrible with money, lives in her overdraft and didn't have a penny to put in. We decided that I would buy the property and she would help out with the bills.

The house costs around £800 a month to run including the mortgage and bills and she gives me roughly £300 a month.

Initially she was happy with this arrangement but she's now quite concerned that she will be left with nothing if we split up and has to move out the house.

Would it be possible to add her to the mortgage of the property but protect the money I've already put in?

Can anyone advise what is required and the costs associated with this?

If all goes well we will get married one day, but this will hopefully help her feel a bit more secure in the meantime.

Cheers!

Ben

Tom99

[FONT=Verdana, sans-serif]You would need to become joint owners of the property as Tenants In Common. Then a declaration of trust deed would set out how you own the property, basically what will happen to the net sale proceeds when you sell.[/FONT]

[FONT=Verdana, sans-serif]Your girlfriend has not lived with you for long and gives you £300pm. If you take away 50% of the bills like council tax, gas, elec, phone, water, contents insurance etc, how much would be left?[/FONT]

[FONT=Verdana, sans-serif]Let say £150 so that leaves £150 as her 'rent' or 'mortgage'. How much would it cost if you were renting, rather than buying, you house? A lot more than £300 per month I would think.[/FONT]

[FONT=Verdana, sans-serif]So you could say to your girlfriend, at £300pm all in, you are getting a cracking good deal, much cheaper than if you shared a rental property.[/FONT]

[FONT=Verdana, sans-serif]Or you could say ok, whilst I will not add you as a joint owner we will assume £100pm is adding to your 'equity' so if we split in 12mths time you will get £1,200. This could be put in a separate savings account if you like.[/FONT]

AdrianC

You don't "put her on the mortgage". She would become a joint owner. Sure, you can do that in a way that says you own 60%, she owns 40% or whatever split you decide on...


...but with her record of financial incompetence, do you actually want that?

Edi81

Sounds as if your girlfriend is getting a bargain!

I wouldn’t be adding her to the mortgage at this point. If you do decide to change to joint owners you need to agree in advance and have an agreement drawn up by a solicitor if what would happen if you were to separate.

Of course, if you marry things change again.....

GoingOn30

You should both look to get independent legal advice about what a deed of trust would say about what you each contribute and what you would both take away in the case of a split.

Bossypants

Tom99 wrote: »

[FONT=Verdana, sans-serif]You would need to become joint owners of the property as Tenants In Common. Then a declaration of trust deed would set out how you own the property, basically what will happen to the net sale proceeds when you sell.[/FONT]

[FONT=Verdana, sans-serif]Your girlfriend has not lived with you for long and gives you £300pm. If you take away 50% of the bills like council tax, gas, elec, phone, water, contents insurance etc, how much would be left?[/FONT]

[FONT=Verdana, sans-serif]Let say £150 so that leaves £150 as her 'rent' or 'mortgage'. How much would it cost if you were renting, rather than buying, you house? A lot more than £300 per month I would think.[/FONT]

[FONT=Verdana, sans-serif]So you could say to your girlfriend, at £300pm all in, you are getting a cracking good deal, much cheaper than if you shared a rental property.[/FONT]

[FONT=Verdana, sans-serif]Or you could say ok, whilst I will not add you as a joint owner we will assume £100pm is adding to your 'equity' so if we split in 12mths time you will get £1,200. This could be put in a separate savings account if you like.[/FONT]

I think this is the most sensible advice for now. Getting her actually listed as a joint owner and having the appropriate deed drawn up is going to cost, at the rate she is going possibly more than she would put into the house in a year. If you just keep her contribution in a separate account for now, it will be a lot easier to return to her should you split up. If the relationship lasts, the two of you can decide at a later date to have her use the money in that account to buy into the house (or something else - whatever works for the two of you).

TBagpuss

You would need a declaration of trust, possibly together with a cohabitation agreement.
You could have a declaration of trust without adding her to the mortgage, if you wanted, which might be appropriate if her credit record meant that putting the house into joint names and having a joint mortgage meant that you don' get as good a deal as you can get by yourself.

The declaration of trust can either say that you get £40K if the house is sold and the balance of equity is split equally, or you work out what % of the house value it was when you bought and do it that way (e.g. if you bought for £200K with a £40K deposit, that you have the first 20% of the value and the balance is split.

If you are going to continue to pay a higher proportion of the bills etc then it would be possible to incorporate that ,too.

e.g. to say you get the first 20% (or whatever is appropriate based on your deposit) and the balance is held 62.5% to you, 37.5% to her, reflecting your unequal contributions to the mortgage and bills.

If you do get married, you'd need to discuss at that point whether you wanted to revise the agreement to expressly state it continues notwithstanding the marriage, or alternatively, have a new agreement at that point.

Mojisola

BirdisBlue wrote: »

I bought my first home around 12 months ago. The house is in my name only and I am currently living in it with my girlfriend of 5 years.

I worked hard and saved for a while and managed to put down around 40 thousand for a deposit.

My girlfriend is terrible with money, lives in her overdraft and didn't have a penny to put in.

I wouldn't want to join finances with someone who can't manage their money.

I would second Tom99's idea of putting some of her contribution away in savings for a year and ask her to get to grips with money management - look at the situation again in a year's time.

While your GF doesn't have any security - you could make her leave at a moment's notice - she also doesn't have any responsibility for the mortgage. If she joins you on the mortgage, she will be as responsible for paying it as you are. If you were to lose your job or become too ill to work, the mortgage company would expect her to pay up.

Facknats

If she is terrible with money, couldn't that put the house at risk if anything happened to make her debts unsustainable and she has joint ownership?

I recognise that rarely can household finances be split 50/50 but being in a similar position (boyfriend earns 4k more than me but spends on cars, computers and sushi while I save three times more) we'll definitely be looking at drawing up an agreement similar to that suggested by Tom99 as if we had both spent on cars and sushi there would be no house.

Beeper

Maybe applicable to OP or the gf but here’s my experience on this.

Many many years ago a partner and I were looking to move in together. I had 20-30k saved up for a deposit and on approx £33k salary. He had about 3k in savings, was a self employed in building trade and about to start university for his first full time undergrad at 30yrs old. I wanted to buy and we decided that I would buy and he would pay me rent (approx half the mortgage but still significantly below market value) and it would cheaper overall for both of us. Some time later he decided he was no longer happy with that plan as he would be paying into a house and then getting nothing back for it. I told him it would be the same if he was renting anywhere else, and if he’s unhappy renting he could try to go to a broker with his 3k deposit and ‘income’ from student finance and see what he can buy himself. I didn’t (and still don’t) understand why ,if you are less careful in saving and planning or even just not as fortunate in jobs/ income, you should feel entitled to help from your slightly better off partner. He was three years older than me and had been in work longer, albeit in a lower paid job, but only having 3k saved up at 30 shows questionable financial choices, which I didn’t mind until this happened. It would have been different if he could contribute to the deposit or had made sacrifices in his career for our relationship (eg stopping work to raise children) but paying what he would simply have had to pay in rent to someone else was not enough to give him a % of a house.

Tom99

Beeper wrote: »

Maybe applicable to OP or the gf but here’s my experience on this.

Many many years ago a partner and I were looking to move in together. I had 20-30k saved up for a deposit and on approx £33k salary. He had about 3k in savings, was a self employed in building trade and about to start university for his first full time undergrad at 30yrs old. I wanted to buy and we decided that I would buy and he would pay me rent (approx half the mortgage but still significantly below market value) and it would cheaper overall for both of us. Some time later he decided he was no longer happy with that plan as he would be paying into a house and then getting nothing back for it. I told him it would be the same if he was renting anywhere else, and if he’s unhappy renting he could try to go to a broker with his 3k deposit and ‘income’ from student finance and see what he can buy himself. I didn’t (and still don’t) understand why ,if you are less careful in saving and planning or even just not as fortunate in jobs/ income, you should feel entitled to help from your slightly better off partner. He was three years older than me and had been in work longer, albeit in a lower paid job, but only having 3k saved up at 30 shows questionable financial choices, which I didn’t mind until this happened. It would have been different if he could contribute to the deposit or had made sacrifices in his career for our relationship (eg stopping work to raise children) but paying what he would simply have had to pay in rent to someone else was not enough to give him a % of a house.

[FONT=Verdana, sans-serif]I think that neatly sums up the situation many couples find themselves in.[/FONT]
[FONT=Verdana, sans-serif]If partner A has bought a property already, with their own deposit and finance, I don't think they should be in any rush to share that success with partner B. Particularly if B does not have the funds to stump up an equivalent deposit.[/FONT]
[FONT=Verdana, sans-serif]Let partner B pay a reduced rent to A, at least for a couple of years until its clear the partnership may be more permanent.[/FONT]