Looking to buy with partner with varied deposit contributions

Crazycatlady123

Hi All,

I've read a number of threads on here talking about unequal contributions towards a house purchase and although they've been helpful, the values aren't quite the same as ours and wondered if the viewpoint was different. My partner and I cannot agree and I worry that it'll only create tension where there otherwise isn't.

My partner had help buying his first home with some chunky inheritance and has proceeded to overpay his mortgage for some time. As a result, he likely has around £400k equity - yeah, that extra 0 is correct.

I have diddly squat.

I was renting prior to moving in with him and on doing I offered (and do) pay all the bills (not half as others have suggested) - we have an informal agreement that he continues to pay his mortgage and associated insurances, and I pay all the bills. Food etc is paid for from a joint account which we contribute to equally on a monthly basis.

We are looking to buy together and due to the area that we want to live in, the houses we're considering are circa £700-800k. I have savings but this would be mostly diminished once stamp has been paid on a property of that value.

So, new house: £800k
His deposit: £400k
My deposit: £0

We have toyed with a few ways to split this but none of them are agreeable to both. He wants to see the equity on any profit split by %. For example, he would get 75% of any profit and I would get 25%. While I understand why he'd do that, I disagree.

Once moving into the property, any renovations (of which there could be considerable amounts if we go nearer the £700k mark - I know, right?!), repairs and everything else relating to the house will be split 50/50. Therefore, if my contributions to the repairs and renovations are split 50/50, I'd want to see any increase in property value reflected in my return.

To be clear, I don't want any of his money. I don't want to touch his deposit, I want him to get ALL of that back should we ever sell. What I also don't want though, is for his profit to be huge in comparison to mine when we've contributed the same for the works required to generate said profit. After speaking to a friend of mine who was in an eerily similar position, they agreed to draw up a tenants in common agreement which say his deposit protected and the rest split 50/50 as per their ongoing monthly contributions - this was advice given by two independent legal advisors on the matter - however my partner is still not in agreement.

We have been round and round in circles on this. We both want to move forward and create building a life together, but like responsible adults we're discussing the 'what ifs' which is proving stalemate.

Ultimately, he couldn't buy a house of that value on his own (I couldn't even dream of it) but we could afford it together.

I'd be interested to hear peoples thoughts on this as the values listed above have greater disparity that any of the posts that we've seen.

Thanks in advance - sorry for the essay!

MovingForwards

I would get a solicitor to draw up a deed.

The first £400k back to your OH, you get back whatever you are putting in and the rest is split 50/50. Provided you are both paying 50% of the mortgage / repairs etc.

getmore4less

So, new house: £800k
His deposit: £400k
My deposit: £0

might be easier to think of it as 2 houses joined together at £400k each

He pay for anything to do with that 1/2 and gets all the profit/loss from this 1/2.

The other 1/2 you split in whatever way you want.

say 50:50 you split all costs and profit loss on that 1/2

If he owns 50% + 1/2 of 50% thats 75% and he pays 75% of all the costs but gets 75% of any profit/loss on that 75%


the other option if you want 50:50 on the ownership is you pay all the mortgage as you have to borrow the money for your share.

After speaking to a friend of mine who was in an eerily similar position, they agreed to draw up a tenants in common agreement which say his deposit protected and the rest split 50/50 as per their ongoing monthly contributions - this was advice given by two independent legal advisors on the matter - however my partner is still not in agreement.

If you did that with your partner he is in effect lending you £200k interest free.

He may agree to that but that is a lot of money to lend without any return.

Crazycatlady123

Yeah that's where I want it to go however he feels he should see a return on his considerable investment. Which I don't disagree with except this isn't just an investment. But out joint home.

Pixie5740

Why does it make a difference if your amounts are different to those in the million and one other threads about unequal deposit contributions? The mechanisms of the calculations are still the same regardless of the amounts involved.

getmore4less

Crazycatlady123 wrote: »

Yeah that's where I want it to go however he feels he should see a return on his considerable investment. Which I don't disagree with except this isn't just an investment. But out joint home.

If you want him to lend you £200k interest free then tell him that.

It is a very simple way to understand the situation, if he says no then you know where you stand and have to come to some other agreement.


It is the total cost of purchase that counts so if you are paying costs like SDLT then 1/2 of that offsets what he is lending you so it might not be the full £200k

aries_163

I’m on the side of protect his £400k deposit, and then split any future gained equity 50:50 as long as all mortgage payments, bills, renovations etc are paid 50:50.
I was in your OHs position (although with significantly lower amounts involved!!) and that’s how we did it.
I personally didn’t see / agree with the argument on needing to see a return on my ‘investment’. My larger deposit amount was equity in my then property so it’s not like it was sat in a bank gaining interest. If it was then i might have felt different, but I couldn’t touch it or use it for anything else whilst I still owned my then property.
At the end of the day you both want to move house: he can’t do it without you and you can’t do it without him. Seems mutually beneficial to me.

Marvel1

What if there was a crash (never know), why should he still get his £400K, unless I'm something?

Slithery

Pay all mortgage, bills and renovation costs equally.

When you sell he gets 50% of the sale price (to account for his initial deposit), then you pay off the mortgage and both get 50% of what's left.

saajan_12

Crazycatlady123 wrote: »

What I also don't want though, is for his profit to be huge in comparison to mine when we've contributed the same for the works required to generate said profit.

Crazycatlady123 wrote: »

Yeah that's where I want it to go however he feels he should see a return on his considerable investment. Which I don't disagree with except this isn't just an investment. But out joint home.

You are focussing on the profit you might make and don't want to lose out on the return on your investment into repairs (which are partly going to be decoration etc not capital expenses that actually add value. But when it comes to his 400k deposit, then its 'our home' not an investment??

You can't have it both ways.

Crazycatlady123 wrote: »

So, new house: £800k
His deposit: £400k
My deposit: £0

..they agreed to draw up a tenants in common agreement which say his deposit protected and the rest split 50/50 as per their ongoing monthly contributions - this was advice given by two independent legal advisors on the matter - however my partner is still not in agreement.

legal advisors may say thats a legally sound, ie no loopholes, but that doesn't mean its the equitable way or there isn't another equally good method. What if the values were even more disparate, and he paid the full £800k upfront, but you split ongoing repair costs totalling £10k. After a few years the market booms and the property value doubles.. so you get 50% of everything except his 800k deposit, ie you get £400k for doing some repairs.. is that fair?

Personally this seems the most fair way, but then you have to pay for capital improvements etc in the same shares as the ownership

getmore4less wrote: »

He pay for anything to do with that 1/2 and gets all the profit/loss from this 1/2.

The other 1/2 you split in whatever way you want.

say 50:50 you split all costs and profit loss on that 1/2

If he owns 50% + 1/2 of 50% thats 75% and he pays 75% of all the costs but gets 75% of any profit/loss on that 75%

If you want to split mortgage 50/50 then effectively you're contributing the following to the initial purchase price
OP: 200k mortgage = 25%
Partner: 400k deposit + 200k mortgage = 75%

You should split capital improvement costs in the same shares ie you pay 25%. Improvements never add the value they cost, but say you do a £100k extension: you pay £25k, partner pays £75k. Say in a perfect world that increases the value to £900k.. you own 25% = £225k which reflects your half of the mortgae and quarter of the repair costs you put in. If the property then increases in value due to the market, nothing to do with the repairs, then partner gets a larger share of that because he invested more.

letsbetfair

In terms of future profits, is it likely that the work on the house you're paying half of will be a significant aspect of that? If you're buying a £800k place in good condition and make significant gains, I'd expect almost all of these gains to be down to movements in the housing market rather than anything you do.

As getmore4less says, if what you're asking for is an effective loan of £200k, you could just ask for that. One question, though, is what happens of the house market falls - would you want to pay 50% of any losses on the property, as well as take 50% of any gains?