Partner Contributing to Mortgage

Thrugelmir

Once you add your partner to the mortgage. In the declaration of trust you could specify that you have the option of buying your partner out. In the event of x or y etc. 

MWT

CSL0183 said:

Btw, I have literally just been through this with a new house purchase with my partner. I put in £75k deposit, my partner £0. That £75k is registered against the deeds incase of separation, essentially I get that back before any further equity is split 50/50. We pay the mortgage payment 50/50. 

Hopefully that is £75k as a percentage of the purchase price to be returned as a percentage of the future value before the 50/50 split, not just £75k or you've not allowed for either positive or negative equity at the future point of sale?

... but if you are happy then that is what matters.

getmore4less

CSL0183 said:

getmore4less said:

You can do deed of trust that sets out the beneficial interest based on current values and the share of the debt being serviced. 

If you separate you can work out the beneficial interest less the share of the debt. 

This does not need to be on the mortgage or deeds but create a future debt to the OH based on the value and outstanding debt. 

Another popular option is don't have the OH contribute anything they set up savings account for the equivalent, to buy in later. 

It is very easy to work out the numbers the hard bit is having the resources at split time and deciding what triggers the payout.

The way it works is by paying part of the mortgage they buy that share of the house. Eg £100k house £60k mortgage pay 50:50 then they buy 30% with a £30k debt. 

Split up : value of house is £120k their 30% is now £36k but they still owe 50% of the outstanding mortgage. If that has gone down to £50k you could need to find £11k to buy them out. 

That plan would need to be registered with the land registry though. The house would need a current valuation and the equity share needs to be known. In the event of the current owner dying, who has ownership of the house? Who takes on the mortgage? It’s a lot more complicated than you make out. Without being on the deeds or indeed the mortgage the partner has no say in the property, you would need both mortgage approval and solicitor would need to register that agreement against the deeds. 

£100k house, £60k mortgage, means £40k (or 40%) will always be the owners. The remaining £60K split in a 50/50 way would then give a 30% share to the partner if the mortgage is paid off and the house is still valued at £100k. If the mortgage is paid off and the house is now worth £150K, the owner still has his 40% (£60k share) and the pair then entitled to £45k each of the remainder. For it to ever get to 50/50 then the partner would have to buy out separately or put a cash injected into the mortgage. 

Best seek legal and mortgage advice but it’s certainly not as easy as doing a quick deed of trust / minute of agreement as as above, what happens in the event of death or separation, it could get messy so mortgage company needs to know and approve. 

Not necessary 
land registry don't care about the beneficial interest they just record the legal interests, it is very common for the people named on the deed to only hold the legal interest the beneficial interest being different people. 

The basic on death is the house belongs to the estate and the contributer has a beneficial interest as outlined by the deed. 

The deed can deal with deaths or default to a debt against the estate and it handled by the administration of the estate. 

getmore4less

ShowMeTheDough said:

Thanks for the comments, folks. 

Seems far more complex than I thought it would be! 

Does it makes things any less complicated if my OH was only interested in getting her contributions back should we split - i.e. no uplift/reduction in line with the property value, or adjustments for interest rates etc? If she'd paid say £10k in in 2 years and we decided to part ways, if she's happy with getting just the £10k back - is that workable? If all payments are recorded, and I have signed something to confirm I would be reimbursing her in full should we split (or in the case of death, she would receive it from my estate) could this be an option? 

Sorry if I'm going over old ground of what's already been discussed - I guess I just didn't realise this would be so complicated! 

Thats just the same as them lending you money interest free. 

getmore4less

MWT said:

CSL0183 said:

Btw, I have literally just been through this with a new house purchase with my partner. I put in £75k deposit, my partner £0. That £75k is registered against the deeds incase of separation, essentially I get that back before any further equity is split 50/50. We pay the mortgage payment 50/50. 

Hopefully that is £75k as a percentage of the purchase price to be returned as a percentage of the future value before the 50/50 split, not just £75k or you've not allowed for either positive or negative equity at the future point of sale?

... but if you are happy then that is what matters.

Even then, that is only relevant at the time, any future change to the deed of trust overrides what was sent to the land reg. 

CSL0183

getmore4less said:

CSL0183 said:

getmore4less said:

You can do deed of trust that sets out the beneficial interest based on current values and the share of the debt being serviced. 

If you separate you can work out the beneficial interest less the share of the debt. 

This does not need to be on the mortgage or deeds but create a future debt to the OH based on the value and outstanding debt. 

Another popular option is don't have the OH contribute anything they set up savings account for the equivalent, to buy in later. 

It is very easy to work out the numbers the hard bit is having the resources at split time and deciding what triggers the payout.

The way it works is by paying part of the mortgage they buy that share of the house. Eg £100k house £60k mortgage pay 50:50 then they buy 30% with a £30k debt. 

Split up : value of house is £120k their 30% is now £36k but they still owe 50% of the outstanding mortgage. If that has gone down to £50k you could need to find £11k to buy them out. 

That plan would need to be registered with the land registry though. The house would need a current valuation and the equity share needs to be known. In the event of the current owner dying, who has ownership of the house? Who takes on the mortgage? It’s a lot more complicated than you make out. Without being on the deeds or indeed the mortgage the partner has no say in the property, you would need both mortgage approval and solicitor would need to register that agreement against the deeds. 

£100k house, £60k mortgage, means £40k (or 40%) will always be the owners. The remaining £60K split in a 50/50 way would then give a 30% share to the partner if the mortgage is paid off and the house is still valued at £100k. If the mortgage is paid off and the house is now worth £150K, the owner still has his 40% (£60k share) and the pair then entitled to £45k each of the remainder. For it to ever get to 50/50 then the partner would have to buy out separately or put a cash injected into the mortgage. 

Best seek legal and mortgage advice but it’s certainly not as easy as doing a quick deed of trust / minute of agreement as as above, what happens in the event of death or separation, it could get messy so mortgage company needs to know and approve. 

Not necessary 
land registry don't care about the beneficial interest they just record the legal interests, it is very common for the people named on the deed to only hold the legal interest the beneficial interest being different people. 

The basic on death is the house belongs to the estate and the contributer has a beneficial interest as outlined by the deed. 

The deed can deal with deaths or default to a debt against the estate and it handled by the administration of the estate. 

I have just been through this (albeit in Scotland) where my deposit (Within the deed of trust / Minute of agreement for me) was registered within the title deeds. Both of us are obviously named within the title deeds, just that I have the first £75k before any equity is then split. 

CSL0183

MWT said:

CSL0183 said:

Btw, I have literally just been through this with a new house purchase with my partner. I put in £75k deposit, my partner £0. That £75k is registered against the deeds incase of separation, essentially I get that back before any further equity is split 50/50. We pay the mortgage payment 50/50. 

Hopefully that is £75k as a percentage of the purchase price to be returned as a percentage of the future value before the 50/50 split, not just £75k or you've not allowed for either positive or negative equity at the future point of sale?

... but if you are happy then that is what matters.

We are about to put £150-£200k into the house for an extension / renovations which will increase the value of the property by at least that amount. I thought it would be unfair for me to go with the % term on that basis. The protected deposit will obviously dwindle over time through inflation and or house price growth but I’m happy enough with that.

Windofchange

Not sure why you want to do this? I have lived with two partners who owned their homes in the past and contributed to their mortgage. Way I saw it was that it was a rental payment, and that money belonged to them in the manner that it would any other landlord. I never expected to get any equity or return of money if we went our separate ways, which we eventually did and I just moved out. What you are suggesting seems really dodgy for a lot of the reasons stated already, but also because if you haven't lived together yet how do you know it's not all going to go sour in a few months time? Surely you are best moving her in, having her pay some money as 'rent', and then if things work out look to buying a place jointly in a few years time? If anything, you should be going the other way and getting her to sign a document stating that although she is living there, she has no legal claim to the house if you separate. 

newdriver101

Windofchange said:

Not sure why you want to do this? I have lived with two partners who owned their homes in the past and contributed to their mortgage. Way I saw it was that it was a rental payment, and that money belonged to them in the manner that it would any other landlord. I never expected to get any equity or return of money if we went our separate ways, which we eventually did and I just moved out. What you are suggesting seems really dodgy for a lot of the reasons stated already, but also because if you haven't lived together yet how do you know it's not all going to go sour in a few months time? Surely you are best moving her in, having her pay some money as 'rent', and then if things work out look to buying a place jointly in a few years time? If anything, you should be going the other way and getting her to sign a document stating that although she is living there, she has no legal claim to the house if you separate. 

1. Contributing to the mortgage (even if you call it “rent”) can create an interest in the property - whilst in your case, it seems the break-ups were amicable and/or you were happy to walk away when the relationship ended, this is not always the case in break-ups - (I daresay, often the manner in which the break-up occurred may be the trigger for seeking a claim to the property when someone otherwise wouldn’t have done so)...

2. A document stating she has no legal claim to the house may not be enforceable if the couple go on to have kids...

Best option as others have said is for OP to add gf to mortgage and a solicitor to draw up a deed of trust stating the desired ownership.  If that is not feasible at present, “lending” the money seems to be the next best option...

getmore4less

CSL0183 said:

MWT said:

CSL0183 said:

Btw, I have literally just been through this with a new house purchase with my partner. I put in £75k deposit, my partner £0. That £75k is registered against the deeds incase of separation, essentially I get that back before any further equity is split 50/50. We pay the mortgage payment 50/50. 

Hopefully that is £75k as a percentage of the purchase price to be returned as a percentage of the future value before the 50/50 split, not just £75k or you've not allowed for either positive or negative equity at the future point of sale?

... but if you are happy then that is what matters.

We are about to put £150-£200k into the house for an extension / renovations which will increase the value of the property by at least that amount. I thought it would be unfair for me to go with the % term on that basis. The protected deposit will obviously dwindle over time through inflation and or house price growth but I’m happy enough with that.

The get your money back is just the same as lending the other person 1/2 the difference between you cash inputs. 

If this injection is at the start(or relatively soon) it could have been included in an equitable shares calculation while setting up.