Deed of Trust or Cohabitation Agreement?

Chadd123

Can anyone help me understand the difference between a Deed of Trust and a Co-habitation Agreement? Myself and my partner are buying a property together but unfortunately I can't go on the mortgage as I was made redundant due to Covid last year, and when we tried to apply for a joint mortgage as opposed to one in just his name, the amount we could borrow went down. 

I have put a fair bit into the deposit though and so has my mother so we are going to get a co-habitation agreement drawn up so I would be protected should our relationship breakdown, however I'm struggling to understand the difference between the two.

If anyone could help explain in layman's terms that would be great, as I'm confused if I need both or if a co-habitation agreement would suffice.

We're not married

Thank you 

[Deleted User]

Chadd123 said:

Can anyone help me understand the difference between a Deed of Trust and a Co-habitation Agreement? Myself and my partner are buying a property together but unfortunately I can't go on the mortgage as I was made redundant due to Covid last year, and when we tried to apply for a joint mortgage as opposed to one in just his name, the amount we could borrow went down. 

I have put a fair bit into the deposit though and so has my mother so we are going to get a co-habitation agreement drawn up so I would be protected should our relationship breakdown, however I'm struggling to understand the difference between the two.

If anyone could help explain in layman's terms that would be great, as I'm confused if I need both or if a co-habitation agreement would suffice.

We're not married

Thank you 

Is the mortgage lender aware that you and your mother are contributing to the deposit? Have you had to declare the money as a gift to your partner? 

Chadd123

Lover_of_Lycra said:

Is the mortgage lender aware that you and your mother are contributing to the deposit? Have you had to declare the money as a gift to your partner? 

This is my issue as unfortunately they are not aware as all the lender said all the deposit had to come from his family (which is ridiculous seeing as I am buying the property with him!) which makes me think a deed of trust is out the question...

[Deleted User]

Chadd123 said:

Lover_of_Lycra said:

Is the mortgage lender aware that you and your mother are contributing to the deposit? Have you had to declare the money as a gift to your partner? 

This is my issue as unfortunately they are not aware as all the lender said all the deposit had to come from his family (which is ridiculous seeing as I am buying the property with him!) which makes me think a deed of trust is out the question...

You’re not buying the property with him though so it’s not at all ridiculous. He is buying the property by himself and he will need to commit mortgage fraud with your help to do it. I think you’ll find it difficult to find a solicitor willing to draft a deed of trust under these circumstances. 

FTB_Dan

Chadd123 said:

Lover_of_Lycra said:

Is the mortgage lender aware that you and your mother are contributing to the deposit? Have you had to declare the money as a gift to your partner? 

This is my issue as unfortunately they are not aware as all the lender said all the deposit had to come from his family (which is ridiculous seeing as I am buying the property with him!) which makes me think a deed of trust is out the question...

Surely your solicitor is going to pick up where the money has come from? 

Chadd123

Yes we haven’t got that far yet so I think we might have to rethink things. We only recently just found out about the mortgage problem as our advisor initially said we could both be on it.

I just wanted to understand my options if I could put the money in for the deposit, but that’s looking less and less likely. 

My partner does have enough money for the deposit without my help so it’s not going to be the end of the world, was just hoping to pay my part but we need to do renovations so perhaps my money can go to that, and then we get a co-habitation agreement drawn up instead.

MaryNB

Chadd123 said:

Lover_of_Lycra said:

Is the mortgage lender aware that you and your mother are contributing to the deposit? Have you had to declare the money as a gift to your partner? 

This is my issue as unfortunately they are not aware as all the lender said all the deposit had to come from his family (which is ridiculous seeing as I am buying the property with him!) which makes me think a deed of trust is out the question...

Many lenders only allow gifted money which means it comes with no strings attached - doesn't need to be repaid, giftor holds no interest in the property. Most lenders don't want anybody else having a charge against the property.

In case your partner defaults on the mortgage, the lender wants to make sure it is easy for them to repossess the property and sell it on to get their money back. Both of the following could all make it more difficult for them to do:

• You are on the deeds but not the mortgage
• You will be giving him money that you expect to get back (by way of a deed or agreement) if anything goes wrong down the line and the house needs to be sold. 

TBagpuss

Chadd123 said:

Can anyone help me understand the difference between a Deed of Trust and a Co-habitation Agreement? Myself and my partner are buying a property together but unfortunately I can't go on the mortgage as I was made redundant due to Covid last year, and when we tried to apply for a joint mortgage as opposed to one in just his name, the amount we could borrow went down. 

I have put a fair bit into the deposit though and so has my mother so we are going to get a co-habitation agreement drawn up so I would be protected should our relationship breakdown, however I'm struggling to understand the difference between the two.

If anyone could help explain in layman's terms that would be great, as I'm confused if I need both or if a co-habitation agreement would suffice.

We're not married

Thank you 

A deed of trust only deals with the ownership of a property. ad would typically just say what % each of you owns.

A cohabitation Agreement can include a declaration of trust but can also include other points - for instance, it might include a process for what should happen in the event that you were to separate (e.g. how soon the property would be put on the market, what the process would be if one of you wished to buy out the other)  

It could also specifically set out an agreement to seek to transfer the property into joint names and remortgage as soon as the current mortgage fix ends.

So broadly speaking, you can have more details in a cohabitation agreement