Strange situation

Moffatt95

Hi, 

thanks for any help you can give me. 

I currently have pretty bad credit, but am due a substantial amount of money as a pay off. 

I am looking to move in with my girlfriend and use my money as my half of the house paid in full,  She will be looking to get a mortgage for her half. 

She will have a 10k deposit and will be looking for a £70-90K mortgage to purchase a £200-220K house with me. 

Will my bad credit effect this? 

Will I need to be named on her mortgage? 

What would be the best way to move forward with this? 

Kind regards.

Exodi

Hi Moffatt95,

It is my understanding that you would need to apply for the mortgage jointly - as most mortgage lenders would not be willing lending to someone if there would be another another charge (person that is owed money from the sale of the house) on the property.

You will likely be credit checked, and will be jointly and severally liable for the mortgage - as in, if she doesn't pay it, you will be expected to. As you will both combined are likely to be way over affordability, I'm not sure that your bad credit will pose an issue.

You would likely want to consider owning the property as 'tenants in common', and have a deed of trust drawn up with a solicitor that protects both of your initial contributions. This is relatively cheap (approx £200-£300).

Brie

It may be possible to gift your share of the house cost to her which she would then need to declare as part of her mortgage application.  And you would have to sign something to say that it is a gift and you do not get a share of the house as a result.  I would think that any sensible solicitor would advise against doing this on the off chance that the two of you split up at some future date as potentially you would lose all your money.  

Whether you can get around this by buying shares in the house you with cash and she with a mortgage may be a possibility but again the solicitor should be able to advise.  Perhaps this is what Exodi refers to in owning it as tenants in common.

MWT

Brie said:

It may be possible to gift your share of the house cost to her which she would then need to declare as part of her mortgage application.  And you would have to sign something to say that it is a gift and you do not get a share of the house as a result.  I would think that any sensible solicitor would advise against doing this on the off chance that the two of you split up at some future date as potentially you would lose all your money. 

This ends up as a 'gift with reservation' as they intend to live in the property.

I would suggest talking to a broker to see if the 'bad credit' is really an issue before trying to come up with schemes to avoid disclosing.

Exodi

Brie said:

Whether you can get around this by buying shares in the house you with cash and she with a mortgage may be a possibility but again the solicitor should be able to advise.  Perhaps this is what Exodi refers to in owning it as tenants in common.

It's not as complicated as you think.

If the house is £220k, he has £110k and she has £10k - they would jointly apply for a mortgage for £100k (as they have £120k deposit) - they should get a decent product with a low LTV of ~45%. That's it from the lenders perspective - they don't care about the arrangement between the owners.

OP would inform their solicictor that they want to hold the property as tenants in common instead of joint tenants (which basically means they want to own the property differently than just 50/50). They could then have a deed of trust drawn up with the solicitor which gives the details on how they want money to be shared up if the house is sold.

It could be along the lines of 'Person A gets £110k back, Person B gets £10k back, and the remaining equity is split 50/50'.

It's actually all very simple - but the core point I don't think he'll get away from is needing to be on the mortgage as a borrower.

Exodi

MWT said:

Brie said:

It may be possible to gift your share of the house cost to her which she would then need to declare as part of her mortgage application.  And you would have to sign something to say that it is a gift and you do not get a share of the house as a result.  I would think that any sensible solicitor would advise against doing this on the off chance that the two of you split up at some future date as potentially you would lose all your money. 

This ends up as a 'gift with reservation' as they intend to live in the property.

I would suggest talking to a broker to see if the 'bad credit' is really an issue before trying to come up with schemes to avoid disclosing.

Especially if those schemes involve legally 'gifting' someone £100k+!!!!

Sistergold

Gifting your money is not a good idea. Best not put money into a house where you name is not in the paperwork. People change pretty quickly once they know that they have all your money no matter how sweet things are initially. You won’t need to search far to find real life horror stories on here about your exact same scenario. 

getmore4less

Exodi said:

Brie said:

Whether you can get around this by buying shares in the house you with cash and she with a mortgage may be a possibility but again the solicitor should be able to advise.  Perhaps this is what Exodi refers to in owning it as tenants in common.

It's not as complicated as you think.

If the house is £220k, he has £110k and she has £10k - they would jointly apply for a mortgage for £100k (as they have £120k deposit) - they should get a decent product with a low LTV of ~45%. That's it from the lenders perspective - they don't care about the arrangement between the owners.

OP would inform their solicictor that they want to hold the property as tenants in common instead of joint tenants (which basically means they want to own the property differently than just 50/50). They could then have a deed of trust drawn up with the solicitor which gives the details on how they want money to be shared up if the house is sold.

It could be along the lines of 'Person A gets £110k back, Person B gets £10k back, and the remaining equity is split 50/50'.

It's actually all very simple - but the core point I don't think he'll get away from is needing to be on the mortgage as a borrower.

That's a very poor way to do it.

The one putting 1/2 the money down never sees 1/2 the rise/fall in  in value

Thrugelmir

getmore4less said:

Exodi said:

Brie said:

Whether you can get around this by buying shares in the house you with cash and she with a mortgage may be a possibility but again the solicitor should be able to advise.  Perhaps this is what Exodi refers to in owning it as tenants in common.

It's not as complicated as you think.

If the house is £220k, he has £110k and she has £10k - they would jointly apply for a mortgage for £100k (as they have £120k deposit) - they should get a decent product with a low LTV of ~45%. That's it from the lenders perspective - they don't care about the arrangement between the owners.

OP would inform their solicictor that they want to hold the property as tenants in common instead of joint tenants (which basically means they want to own the property differently than just 50/50). They could then have a deed of trust drawn up with the solicitor which gives the details on how they want money to be shared up if the house is sold.

It could be along the lines of 'Person A gets £110k back, Person B gets £10k back, and the remaining equity is split 50/50'.

It's actually all very simple - but the core point I don't think he'll get away from is needing to be on the mortgage as a borrower.

That's a very poor way to do it.

The one putting 1/2 the money down never sees 1/2 the rise/fall in  in value

Without each other then there's no purchase to start with.  

Exodi

getmore4less said:

Exodi said:

Brie said:

Whether you can get around this by buying shares in the house you with cash and she with a mortgage may be a possibility but again the solicitor should be able to advise.  Perhaps this is what Exodi refers to in owning it as tenants in common.

It's not as complicated as you think.

If the house is £220k, he has £110k and she has £10k - they would jointly apply for a mortgage for £100k (as they have £120k deposit) - they should get a decent product with a low LTV of ~45%. That's it from the lenders perspective - they don't care about the arrangement between the owners.

OP would inform their solicictor that they want to hold the property as tenants in common instead of joint tenants (which basically means they want to own the property differently than just 50/50). They could then have a deed of trust drawn up with the solicitor which gives the details on how they want money to be shared up if the house is sold.

It could be along the lines of 'Person A gets £110k back, Person B gets £10k back, and the remaining equity is split 50/50'.

It's actually all very simple - but the core point I don't think he'll get away from is needing to be on the mortgage as a borrower.

That's a very poor way to do it.

The one putting 1/2 the money down never sees 1/2 the rise/fall in  in value

I've noticed that no matter the context of the thread, you always suggest DoT arrangements that prioritise the person putting in the most.

Dare I guess that you have a DoT with someone, have contributed more and have some 'creative' terms in it to ensure you're 'well compensated' in the event of a break up?

getmore4less

Exodi said:

getmore4less said:

Exodi said:

Brie said:

Whether you can get around this by buying shares in the house you with cash and she with a mortgage may be a possibility but again the solicitor should be able to advise.  Perhaps this is what Exodi refers to in owning it as tenants in common.

It's not as complicated as you think.

If the house is £220k, he has £110k and she has £10k - they would jointly apply for a mortgage for £100k (as they have £120k deposit) - they should get a decent product with a low LTV of ~45%. That's it from the lenders perspective - they don't care about the arrangement between the owners.

OP would inform their solicictor that they want to hold the property as tenants in common instead of joint tenants (which basically means they want to own the property differently than just 50/50). They could then have a deed of trust drawn up with the solicitor which gives the details on how they want money to be shared up if the house is sold.

It could be along the lines of 'Person A gets £110k back, Person B gets £10k back, and the remaining equity is split 50/50'.

It's actually all very simple - but the core point I don't think he'll get away from is needing to be on the mortgage as a borrower.

That's a very poor way to do it.

The one putting 1/2 the money down never sees 1/2 the rise/fall in  in value

I've noticed that no matter the context of the thread, you always suggest DoT arrangements that prioritise the person putting in the most.

Dare I guess that you have a DoT with someone, have contributed more and have some 'creative' terms in it to ensure you're 'well compensated' in the event of a break up?

I suggest the alternative that give a fairer share rather than prioritise gains to the one with the smaller input.

The get your money back is the equivalent of an interest free loan of 1/2 the difference.(£50k in this example)
Decent deal for the one with the smaller deposit.

If a place was bought cash 75:25 using the get your money back with increases spit 50:50 is that fair?

That is what you are suggesting when you do a proper analysis of edge cases with the algorithm.