How do I work out living costs with partner?

finchy_2020

Me and my partner have purchased a house. I was the only one lucky enough to have the deposit to secure the house but being self employed my partner also declared a lot of profit and is paying a huge tax bill so we got a higher value and the house we want.

we are splitting the mortgage and living costs 50/50 and any work that needs doing to the house which can be done by my partner (painting, sanding the floorboards, putting up shelves mirrors etc...) he is happy to do but any major work I’ll be paying for (I have about £25k to spend on the house for when we get a new kitchen, bathroom etc...) my partner won’t be able to contribute much because of his job and Covid he’s not making as much but can afford to pay the mortgage! 

how do we find a common ground to split the house so it’s fair on both parties? If I’ve put down all of the deposit do I own 100% of the house? 

AdrianC

No, if you've put down all the deposit, you do not own all the house...

How much was the purchase price?
How much was the deposit?

As far as deciding what's "fair", can't the pair of you just sit round the table with a bottle of wine and decide what you mutually agree is fair? Because, if not, you're going to have an... interesting... life together.

getmore4less

Might have been a good idea to work this through before buying.

Best to separate living in the place costs from owning the place costs.

If  paying the mortgage 50:50 then that needs to be counted.

you also need to consider all buying costs and maybe some of the extra tax bill as a cost of purchase.

The starting point the shares would are 1/2 mortgage + what was put in to buy.

You could put the £25k into the pot now as a draw down fund.
then there is the value of his effort against your cash.

Some real numbers might help illiterate some options.

Part will be hard numbers but some bits are finger in the air.

finchy_2020

AdrianC said:

No, if you've put down all the deposit, you do not own all the house...

How much was the purchase price?
How much was the deposit?

As far as deciding what's "fair", can't the pair of you just sit round the table with a bottle of wine and decide what you mutually agree is fair? Because, if not, you're going to have an... interesting... life together.

Purchase price: £345,000
my deposit was about: £55,000

my partner had to declare about £20k more in profit and pay the tax on it so we could get the mortgage value we wanted. 

Falafels

I agree with getmore4less that it would be a good idea to separate day-to-day living costs from the initial property purchase.

In response to your question "If I’ve put down all of the deposit do I own 100% of the house?" You would certainly own 100% of the house if you had paid the entire purchase price in cash and were the only owner to be named on the title deeds.

However, I'm assuming that you bought a house together and that you're both named on the title deeds. Your rights to the property would depend on whether you bought the house as Joint Tenants or as Tenants in Common, which should have been decided as part of the conveyancing process. This only becomes relevant when the property's sold or one of you dies.

However, when it comes to day-to-day expenses... it all depends on whether you want to assume the role of auditor, and put a price on the work/labour your partner does around the house, offsetting this against the £25K you intend to use for improvements OR whether this is not so much of a business transaction, but more that you have moved in together for love, and are hoping to build a life together. If the latter, then set up a joint account into which you both put money to cover expenses, both anticipated and actual, plus a little bit extra to build up a rainy day fund, and pay household expenses out of it.

I know which is more likely to lead to a happy and harmonious life! 

Good luck with all this xxx

claire111

If I’ve put down all of the deposit do I own 100% of the house? 
No you don't. You own the share that you solicitor has confirmed on your legal paperwork, most likely 50%.

Probably a good idea to discuss with your partner sooner rather than later how you will share things when you split up.

pinkteapot

Has the purchase actually completed? If so, the share each of you own will have been specified in the legal paperwork. Your solicitor must have asked you how you want the ownership set up. Are you Joint Tenants or Tenants in Common? 

Grumpy_chap

finchy_2020 said:

being self employed my partner also declared a lot of profit and is paying a huge tax bill so we got a higher value and the house we want.

finchy_2020 said:

Purchase price: £345,000
my deposit was about: £55,000

my partner had to declare about £20k more in profit and pay the tax on it so we could get the mortgage value we wanted. 

I hate to rain on your parade, but this really has all the hallmarks of a train crash, and not far down the line.

• Purchase £345k
• Deposit (from OP) £55k
• Mortgage £290k
• LTV 85%

To get this mortgage, OP's partner declared "extra" sole trader profits of £20k.  That means an "extra" tax bill of £4k (basic rate) or £8k (higher rate), which is a big sum to find, presumably by the end of January. 

If I understand correctly, this is £20k of profits declared incorrectly for the purpose of securing a larger mortgage and the OP / OP's partner either did not realise this would come with the tax bill, or thought the tax bill was a price worth paying.  That would be like agreeing to buy the property at £4k - £8k (1% - 2%) above market rate.

That extra £20k of profits would mean extra borrowing capability of £60k - £100k depending upon the lender and the multiple agreed.

The OP and the OP's partner are frighteningly over-leveraged.  How do you think, between you, that the mortgage is actually affordable?  What if there is a slight movement in interest rates?  If this goes awry, don't expect any leniency from a lender, as they will look into things hard and if they discover the loan was lent against fraudulent figures, it really is all going to be so totally horrible I daren't even think about it.

finchy_2020 said:

I have about £25k to spend on the house for when we get a new kitchen, bathroom etc...) my partner won’t be able to contribute much because of his job and Covid he’s not making as much but can afford to pay the mortgage! 

That £25k better be used to make the mortgage affordable - put off any ideas of home improvements until you work out how you are ever going to afford this mortgage between you, especially all the while your partner's "normal" income is negatively impacted, irrespective of trying for ever to make the payments against the incorrect income that has been declared.
Either put the £25k in as a lump sum to reduce the mortgage, or keep it safe to pay the mortgage monthly when income is not able to keep up.  Do some sums to work out how this will be best managed, but do not spend it all.
You also need a rainy day fund and be sure to use some "protection" as this relationship cannot afford children in the short term!

As to the final question...

finchy_2020 said:

how do we find a common ground to split the house so it’s fair on both parties? If I’ve put down all of the deposit do I own 100% of the house? 

You do not own all the house just because you put the deposit down.
This would have been better discussed before buying but, you are where you are and need to have an adult conversation together.

I am sorry to bring unwanted news, but if you share some full and frank figures, people in this forum may be able to give some good advice on both how to manage the mortage (no you've got it, it has to be managed).  It may be via SoA in the DFW forum, but for starters:

• Your income
• Partners income (real)
• Partners income (declared)
• Mortgage interest rate, term, monthly payments (repayment or interest only)
• How big is that tax bill?
• Other liabilities - car etc?

Good luck and Happy New Year!

getmore4less

finchy_2020 said:

AdrianC said:

No, if you've put down all the deposit, you do not own all the house...

How much was the purchase price?
How much was the deposit?

As far as deciding what's "fair", can't the pair of you just sit round the table with a bottle of wine and decide what you mutually agree is fair? Because, if not, you're going to have an... interesting... life together.

Purchase price: £345,000
my deposit was about: £55,000

my partner had to declare about £20k more in profit and pay the tax on it so we could get the mortgage value we wanted. 

need to add costs what were they and who paid?

the starting point on the purchase lets add a bit for the extra tax say £5k
cost £350k
You £55k +  £145k  your share  (200/350)  ~57%   the OH ~43%
You could chuck the £25k in the pot and call it  (225/375)   60% 40%

Then you have to value handy person.

if OH does not have cash do they have income they could use to contribute more?
(if not now when they get back on the work?)
If they will have you could split the mortgage differently or deal with the a loan on the side and own 50:50 
On the above with the £25k put in that would work out as around £37.5k  they could just pay you back over time 

Morrigan_2020

finchy_2020 said:

AdrianC said:

No, if you've put down all the deposit, you do not own all the house...

How much was the purchase price?
How much was the deposit?

As far as deciding what's "fair", can't the pair of you just sit round the table with a bottle of wine and decide what you mutually agree is fair? Because, if not, you're going to have an... interesting... life together.

Purchase price: £345,000
my deposit was about: £55,000

my partner had to declare about £20k more in profit and pay the tax on it so we could get the mortgage value we wanted. 

Was your partner planning to dodge paying tax he owed if it wasn't for the house?

Angela_D_3

Morrigan_2020 said:

finchy_2020 said:

AdrianC said:

No, if you've put down all the deposit, you do not own all the house...

How much was the purchase price?
How much was the deposit?

As far as deciding what's "fair", can't the pair of you just sit round the table with a bottle of wine and decide what you mutually agree is fair? Because, if not, you're going to have an... interesting... life together.

Purchase price: £345,000
my deposit was about: £55,000

my partner had to declare about £20k more in profit and pay the tax on it so we could get the mortgage value we wanted. 

Was your partner planning to dodge paying tax he owed if it wasn't for the house?

It dounds like he's declared £20,000 he hasn’t actually made,  so good old fashioned mortgage fraud into the mix for extra fun.