Partner contributing more when putting a deposit down on a house ?

BMTH

Been with my partner for a few months now and things are going really well. We've had a bit of a conversation about finances and future goals such as buying a house etc. She told me she has £40K saved so far for a house which made me feel a little intimidated. I only have £5K currently saved. How on earth does stuff like this work if we decided to put an offer in for a house together? I've worked out that I could get another £5K saved in the next 12 months so if things stayed the same and we 'succesfully' trialled living together that would be my contribution. Is this fair/normal or could there be any legalities in this? Morally I'd feel quite wrong about it.

On the flip side, for what its worth my yearly salary is £28K whereas hers is only £21K.

For the record, I know this is a long long way off but it's just made me think. If it was the other way round I'm not sure how I'd feel.

Brie

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

BMTH

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

Brie

Yes I would suggest it should be.  And yes it will cost a bit to set up but less then if you squabble about it later. 

And wills are always a good idea for a cohabiting but unmarried couple.  Again saves hassle later.  You might want to check about DIY wills or getting "free" will from a solicitor in exchange usually for a charity donation.  Seems to me that November is always free will month....I'm sure there will be some announcement on MSE.

Brambling

Many years ago (1990) when I brought my first property with a friend we had a declaration of trust sometimes called a deed of trust.  This was drawn up by our solicitor and spelt out the % owned by each of us.  It also stated what would happen if one person left/wanted to sell and a notice period the other had to sell or buy out.  We brought the property on a 60-40 split and that was how the mortgage payments were split.  It also contained a clause for negative equity if one person wanted to sell

we both had wills leaving our share to our families but it also gave a period of time before they could sell the property

It was well worth paying for the solicitor especially for your girlfriend

Smithcom

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

This sounds pretty unfair to the OP, unless he's only going to pay 11.11% of the mortgage, and the partner will pay 88.89% of the mortgage.  

Surely, the house will be best owned 50/50, with deposits being recognised legally, so that they find their way back, proportionately, to the 'depositor' in the event of a sale.

Best to get legal advice.   A simple legal agreement will be fairly inexpensive.

SC

basill

Buying with a a friend we had different deposits but split mortgage 50/50.
We had an agreement drawn up recognising the different deposits and allowing either of us to trigger a sale.  After the remaining mortgage was cleared and fees paid, deposits were to be returned with growth or loss calculated pro rata and any balance split equally.   

littlegreenparrot

BMTH said:

Been with my partner for a few months now and things are going really well. We've had a bit of a conversation about finances and future goals such as buying a house etc. She told me she has £40K saved so far for a house which made me feel a little intimidated. I only have £5K currently saved. How on earth does stuff like this work if we decided to put an offer in for a house together? I've worked out that I could get another £5K saved in the next 12 months so if things stayed the same and we 'succesfully' trialled living together that would be my contribution. Is this fair/normal or could there be any legalities in this? Morally I'd feel quite wrong about it.

On the flip side, for what its worth my yearly salary is £28K whereas hers is only £21K.

For the record, I know this is a long long way off but it's just made me think. If it was the other way round I'm not sure how I'd feel.

Blimey, 40k saved on an income of 21k, that's good going.

You have had good advice already. I wanted to comment on 'Morally I'd feel quite wrong about it'

I'm going to assume that if everything goes well enough to buy a house then the hope is it's for the long game.

If that's the case things are going to change sometimes. Salary, work hours, commuting time, illness, babies, and lots of other things change the dynamic. Maybe they put in more deposit money, maybe you do more maintenance, or end up paying more of the mortgage for a few years. Maybe lots of things happen.

I'm glad to hear you want it to be fair, that's a great start, but it isn't just about the money. Other things matter as well, what's important is that you both achieve what you want - how exactly that happens is up to you. 

maman

It's heartening that you want things to be fair OP and that you're planning ahead now rather than trying to clear up a mess that we often read about. I'd agree that you need a legally drawn up agreement so that, should things not work out, you both come out with what you've put in (adjusted for any appreciation or otherwise).

I think what @littlegreenparrot is saying is for the long term future. If circumstances change and perhaps you choose to marry and have a family then you might want to tear up the agreement or not. At the moment, I think you're on the right lines. 

Tokmon

BMTH said:

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

As mentioned you want to get a "declaration of trust". What Brie says is close to being right but the bank doesn't own any part of the house even when buying with a mortgage.

Let's use the example above of a £100k house

You could own the house 50/50 but have a declaration of trust that says when sold 40% goes to your partner 5% goes to you (as this is the percentage of the house each of your deposits are worth) then anything left over is split 50/50 between you after all fees of selling (assuming you each pay half of the mortgage).

This means if house prices go up or down you each benefit or lose from the based on the percentage you put in the from the start so is the fairest way to do it. 

Exodi

Very common - instead of owning the house as 'Joint Tenants' you would own the house as 'Tenants in Common' and would require your solicitor to draw up a deed/declaration of trust between you. This is usually a few hundred quid on top of your typical conveyancing costs - I've had a few drawn up.

I wouldn't pay much attention to the calculations and percentages being propagated above - speak to your partner and your conveyancing solicitor about what you want the DoT to achieve.

Also - this thread is probably better suited in the 'Mortgages & Homes' board > House Buying, Renting & Selling'.