Buying my first house with partner who owns multiple properties

denisekingston

Hi all,

I have known my partner for almost 2 years and we have been talking about living together. I do like to buy a house together with him, but not sure what's the best way to get around it with my own financial situation.

I currently rent, have never bought a property, and have no savings to contribute to the deposit. My salary is reasonable at £50K with almost perfect credit rating. My partner owns two properties, earns about 5x more salary than me. 

With these in mind, what is the best financial arrangement for me to buy a property with my partner so that it will be fair to him and me? I did think about taking out a loan to pay the deposit; or he pays the deposit and I will contribute more to the mortgage; or me taking out a loan to pay the stamp duty? Also what is the best mortgage share between both of us, seeing his salary is so much higher than mine?

Any advice is much appreciated as I do like to discuss this with my partner soon thanks.

csgohan4

I assume you have no deposit, loaning to get a deposit is generally frowned upon by lenders, and will affect your affordability, generally you can borrow 4.5x your gross income, 
If he's willing to make the difference, you could set up a deed of trust where the the stamp duty and deposit/costs is taken out of your future equity should you split

HampshireH

On 50k a year but no savings. That's a fab salary and unless you have debts or really high outgoings the no savings part is a worry.

Do you not want to go into a house purchase with a bit of financial contribution as security? I would recommend saving for a bit to get that bit behind you so you contribute from the off 

He is obviously fairly wealthy but is he happy without you contributing financially? A loan is unlikely. A deed of trust probably a necessity from his part if nothing else.

denisekingston

I want to make financial contribution to the house but it doesn’t make sense for us to get a joint mortgage as it will not be as much compared to the mortgage he can get with just his salary alone. 

TN1984

denisekingston said:

I want to make financial contribution to the house but it doesn’t make sense for us to get a joint mortgage as it will not be as much compared to the mortgage he can get with just his salary alone. 

I don't follow. Adding you to the mortgage given you have a good wage in your own right and solid credit, will only increase the maximum potential borrowing surely?

ACG

You should sit down with a good experienced broker, there are various ways to do this and they can talk them through with you to decide which is best for you.
Joint Borrower sole proprietor could be a way to avoid the higher rate stamp duty (but you need to get legal advice on that),
There are other lenders who will allow a single application with your partner paying the deposit - he can even put a charge on the property until you are both happy to remove it to secure his deposit with one of those. 
Some lenders will accept a loaned deposit, so that could be another option. 

denisekingston

TN1984 said:

denisekingston said:

I want to make financial contribution to the house but it doesn’t make sense for us to get a joint mortgage as it will not be as much compared to the mortgage he can get with just his salary alone. 

I don't follow. Adding you to the mortgage given you have a good wage in your own right and solid credit, will only increase the maximum potential borrowing surely?

With single mortgage, 4.5x his salary = 900k mortgage
With joint mortgage, 3x his salary + 2x my salary = 700K mortgage

Is this assumption correct? D

 

TN1984

denisekingston said:

With single mortgage, 4.5x his salary = 900k mortgage
With joint mortgage, 3x his salary + 2x my salary = 700K mortgage
Is this assumption correct? D

It depends on the lender as to what they offer in terms of multiples, but the above is not typical in my experience, no. For example, my wife and I recently had a mortgage offer for just under 5x our combined salaries. Again, it depends on the lender. Have you tried the mortgage calculators on some banks' websites? They all have a 'How much can I borrow calculator?', which should give you some idea (it takes literally seconds to do). Based on what you've said, I would be extremely surprised if you found one that would lend your partner more on his own than if you were included too.

[Deleted User]

ACG said:

You should sit down with a good experienced broker, there are various ways to do this and they can talk them through with you to decide which is best for you.
Joint Borrower sole proprietor could be a way to avoid the higher rate stamp duty (but you need to get legal advice on that),
There are other lenders who will allow a single application with your partner paying the deposit - he can even put a charge on the property until you are both happy to remove it to secure his deposit with one of those. 
Some lenders will accept a loaned deposit, so that could be another option. 

A JBSP mortgage will not help avoid the higher rate of SDLT. SDLT is based on beneficial ownership not legal ownership and it is difficult to argue that one is not a beneficial owner of the property that one lives in and pays the mortgage on. It won't fly with HMRC. 

[Deleted User]

OP, have a search on the forum. There are a plethora of threads about couples buying together who aren't putting in equal amounts of deposit and/or won't be splitting the mortgage 50/50. A Deed of Trust can be drafted to protect each of your interests. As a couple you need to find a solution that is fair to you both and that you can both agree on. You should each take your own legal advice and if you want to jointly purchase the property you'll need to go on the mortgage. Borrowing the deposit won't really help because very few lenders will accept a borrowed deposit. 

ACG

Lover_of_Lycra said:

ACG said:

You should sit down with a good experienced broker, there are various ways to do this and they can talk them through with you to decide which is best for you.
Joint Borrower sole proprietor could be a way to avoid the higher rate stamp duty (but you need to get legal advice on that),
There are other lenders who will allow a single application with your partner paying the deposit - he can even put a charge on the property until you are both happy to remove it to secure his deposit with one of those. 
Some lenders will accept a loaned deposit, so that could be another option. 

A JBSP mortgage will not help avoid the higher rate of SDLT. SDLT is based on beneficial ownership not legal ownership and it is difficult to argue that one is not a beneficial owner of the property that one lives in and pays the mortgage on. It won't fly with HMRC. 

Im not saying I disagree with you, but there are solicitors who appear to think otherwise when the couple are not married. They are the ones who have to advise on that (mortgage brokers are not allowed to). What you have said is/was my understanding but having seen countless times where solicitors do allow it, I tend to take a step back and let solicitors/applicants sort it out as I can only assume the solicitors would be on the hook if it goes wrong.