Financial security for my partner and I

001220

Hi all. Any help, advice and recommendations are greatly appreciated. 

Myself and my partner are both home owners, and we are looking at purchasing a   house together. 

In the mean time, she is currently in the process of selling her property to move into my property prior to our search beginning.

Out of respect for each other, we will be setting up a deed of trust with the solicitors, and we are struggling to work out the best and fairest option in terms of ensuring financial security for both of us, and particularly her as I understand selling her home is a burden as she would lose out on any increase in value. 

Would you have any recommendations for how to ensure she has financial security in the worst case scenario that we would split up whilst living in my house, prior to buying a property together?

My thoughts so far are to:

- value my property when she moves in, and value it if we were to split up and give her a percentage of this difference

- reimburse her with her half of monthly bill payments whilst she has lived here 

Any thoughts and ideas are greatly appreciated,

Paul 

TripleH

Work out how much you two spent on separate houses vs how much it costs now.

Divide that in 2 and stick the difference in a savings account.

If you split up she gets that pot. If you don't, that helps pay for a wedding.

(Assuming she doesn't invest in your property).

canaldumidi

What sort of timeframe are you thonkng of before jointly buying? Simply the time it takes to find & buy somewhere ad sel yours? Or 3 years saving up for a bigger deposit before looking?

If the former,I suggest she simly puts har cash into the highest savings account she can, earns some interest. Whether that will match property value increases in a short space of time is moot.

saajan_12

001220 said:

Hi all. Any help, advice and recommendations are greatly appreciated. 

Myself and my partner are both home owners, and we are looking at purchasing a   house together. 

In the mean time, she is currently in the process of selling her property to move into my property prior to our search beginning.

Out of respect for each other, we will be setting up a deed of trust with the solicitors, and we are struggling to work out the best and fairest option in terms of ensuring financial security for both of us, and particularly her as I understand selling her home is a burden as she would lose out on any increase in value. 

Would you have any recommendations for how to ensure she has financial security in the worst case scenario that we would split up whilst living in my house, prior to buying a property together?

My thoughts so far are to:

- value my property when she moves in, and value it if we were to split up and give her a percentage of this difference

- reimburse her with her half of monthly bill payments whilst she has lived here 

Any thoughts and ideas are greatly appreciated,

Paul 

What is she doing with her sale proceeds - keeping in cash or investing in your property? 

If investing in your property / paying off your mortgage, then you could treat it as her owning a % of your home based (money she invests divided by value at the point she invests). Then if you break up, she gets that % of your home value at the point of breaking up. If not, her contribution to the new house is that % (assuming neither of you add cash to the purchase). 

If not, then can she just invest in something else eg a high interest bank account or bonds. That added to saving on mortgage interest might get close to the lost house price increases. 

SDLT_Geek

saajan_12 said:

001220 said:

Hi all. Any help, advice and recommendations are greatly appreciated. 

Myself and my partner are both home owners, and we are looking at purchasing a   house together. 

In the mean time, she is currently in the process of selling her property to move into my property prior to our search beginning.

Out of respect for each other, we will be setting up a deed of trust with the solicitors, and we are struggling to work out the best and fairest option in terms of ensuring financial security for both of us, and particularly her as I understand selling her home is a burden as she would lose out on any increase in value. 

Would you have any recommendations for how to ensure she has financial security in the worst case scenario that we would split up whilst living in my house, prior to buying a property together?

My thoughts so far are to:

- value my property when she moves in, and value it if we were to split up and give her a percentage of this difference

- reimburse her with her half of monthly bill payments whilst she has lived here 

Any thoughts and ideas are greatly appreciated,

Paul 

What is she doing with her sale proceeds - keeping in cash or investing in your property? 

If investing in your property / paying off your mortgage, then you could treat it as her owning a % of your home based (money she invests divided by value at the point she invests). Then if you break up, she gets that % of your home value at the point of breaking up. If not, her contribution to the new house is that % (assuming neither of you add cash to the purchase). 

If not, then can she just invest in something else eg a high interest bank account or bonds. That added to saving on mortgage interest might get close to the lost house price increases. 

If she is investing in OP's property then stamp duty land tax might well be due (assuming the property is in England) if the amounts involved are high enough.

Spiderroo

001220 said:

Hi all. Any help, advice and recommendations are greatly appreciated. 

Myself and my partner are both home owners, and we are looking at purchasing a   house together. 

In the mean time, she is currently in the process of selling her property to move into my property prior to our search beginning.

Out of respect for each other, we will be setting up a deed of trust with the solicitors, and we are struggling to work out the best and fairest option in terms of ensuring financial security for both of us, and particularly her as I understand selling her home is a burden as she would lose out on any increase in value. 

Would you have any recommendations for how to ensure she has financial security in the worst case scenario that we would split up whilst living in my house, prior to buying a property together?

My thoughts so far are to:

- value my property when she moves in, and value it if we were to split up and give her a percentage of this difference

- reimburse her with her half of monthly bill payments whilst she has lived here 

Any thoughts and ideas are greatly appreciated,

Paul 

I think it depends on your relationship and where you are with it. How likely do you think it is you’ll split up? How long will it be before you buy together? Do you see yourself having kids soon? Will you pay your mortgage 50/50 or proportionally to your earnings? 

We’re currently buying a house but the mortgage is just in my partner’s name because of my credit rating. We want to get married in a few years and my credit rating is improving quickly so I’d go on the mortgage around the same time. Because I’m not on the mortgage we’ve had a lot of discussions about how we’ll manage various situations so I’m not left with nothing but he’s also protected. 

He’s putting in the deposit but I’m paying for a good chunk of the renovation, planning to do a lot of work myself and calling in  favours (I’m from a more trades based family than him). Our agreement is he pays me back what I’ve put in money wise for the first few years unless the value has significantly risen, which we don’t expect will happen. 

After those first few years it gets more complicated for us because there’s a tipping point where he can’t afford to buy me out anymore. You need to stress test at what point you would be unable to buy her out and be honest about that. If you own your house outright how many years until you couldn’t buy her out? And the same when you buy together? Who will stay in the new house if you split? 

If we have kids we’ll have to come back to it again, we’d want me to take maximum maternity leave but that means some months I can’t pay half the mortgage so basing the % on just money doesn’t seem fair anymore. If you’re planning kids, when? And how will that change your agreement? 

Also make sure you both do a will. If your partner dies and has a share in your house it could go to a family member, they might want you to pay them for their share which could be difficult. Especially if you’re grieving or have less money from a period of her being unwell. 

sidneyvic

I'd call it a day now and just not that bother if you are both already planning for the split before you've even moved in.....

Slithery

sidneyvic said:

I'd call it a day now and just not that bother if you are both already planning for the split before you've even moved in.....

What a useless comment - anyone that doesn't do this is immature.
Planning for every eventuality is always a very sensible thing to do. We have enough posts on here from people that didn't think about this sort of thing before it all went tits-up.
If it all goes well then no problem. If it doesn't then both parties know exactly where they stand. It's easier to agree now while things are amicable.

Spiderroo

sidneyvic said:

I'd call it a day now and just not that bother if you are both already planning for the split before you've even moved in.....

People plan for all sorts of things they hope will never happen. That’s the purpose of wills, insurance, emergency planning, fire safety, etc. Far better to set out your expectations and come to an agreement in peacetime than in war. 

RogerBareford

001220 said:

Hi all. Any help, advice and recommendations are greatly appreciated. 

Myself and my partner are both home owners, and we are looking at purchasing a   house together. 

In the mean time, she is currently in the process of selling her property to move into my property prior to our search beginning.

Out of respect for each other, we will be setting up a deed of trust with the solicitors, and we are struggling to work out the best and fairest option in terms of ensuring financial security for both of us, and particularly her as I understand selling her home is a burden as she would lose out on any increase in value. 

Would you have any recommendations for how to ensure she has financial security in the worst case scenario that we would split up whilst living in my house, prior to buying a property together?

My thoughts so far are to:

- value my property when she moves in, and value it if we were to split up and give her a percentage of this difference

- reimburse her with her half of monthly bill payments whilst she has lived here 

Any thoughts and ideas are greatly appreciated,

Paul 

When myself and my partner were in a similar situation we decided that the best option for us was for her to pay a fair share of the bills while living in my house but have no interest or pay anything into my property. This allowed her to have low outgoings and save a good percentage of her income until we eventually bought a house together.

I think this a good option because if your actively looking to buy a house together right now then it shouldn't take too long (a couple of years) so i don't think it would be worth her investing in your current property only to move a short time after.