Daughters need for a declaration of trust, first home.

km1500

could you simply lend the 100k to your daughter at a peppercorn interest rate and secure the 100k as a charge against the property. If things go well you can cancel the charge in the future - if things go badly your 100k is protected.

newdriver101

This is an interesting topic that has come up a few times – I recall in a previous thread someone had mentioned (not sure if it has been raised in this thread) that appreciate D is paying larger deposit but do they need BF salary to obtain the mortgage? If D can’t get mortgage without BF salary then linking future ownership to current deposit ratios may not be the fairest way to do the ownership calculation… That is sometimes a reason why a couple may carve out the deposit (treat it as a fixed value) rather than treat the deposit as a basis for percentage of ownership + capital growth...  just a thought…

Another option mentioned was for BF to pay the lion’s share of the mortgage till he has bought/paid-for his £40k share.  Then they would have both put in equal deposits (£60k each) and can then continue mortgage payments at 50:50… this would obv require maintaining a careful log of payments + separating capital from interest etc. which I think has been mentioned above.

Ultimately, it is whatever works for the couple

It is also worth noting that the DoT can be amended/updated when the couple’s circumstances change...

CSI_Yorkshire

km1500 said:

could you simply lend the 100k to your daughter at a peppercorn interest rate and secure the 100k as a charge against the property. If things go well you can cancel the charge in the future - if things go badly your 100k is protected.

Don't think mortgage lenders appreciate that sort of thing very much.

hazyjo

I'd much rather say 50:50 ongoing, and she'll have £80k more out of any sale if they split.

Kyresa

Do they not have a solicitor to advise them?

You said: 

D provides deposit 100K
BF provides deposit 20K

Ongoing property financing / costs would be 
D - 30%
BF - 70%

If it were me:  

net proceeds (i.e. after any estate agents, solicitors costs and mortgage paid for) to be split as

first 100k to D
2nd 20k to BF

If the net proceeds are less then they take in percentage vs amount they put in so they both take a hit relative to amount they paid at start.


if net proceeds are over 120k, then any proceeds are split 30 : 70   

(assuming you mean that BF is paying 70% of the mortgage each month).   

if they are paying the mortgage 50 : 50 then any profit over their initial investment should be 50 : 50 !

Rodders2409

Thanks All,

To answer a few points raised....

DD can't earn anywhere near BF which is why the split is 30:70, but she can provide the majority deposit due to me gifting a reasonable amount. I'd not really be into loaning the money because I don't think its necessary.

Lenders don't / won't be interested in anything to do with varying ratios other than 50/50...as long as they get their money the liability lays equally at both borrowers.

Kyresa...yep, exactly...the first part of the agreement protects both their deposit payments and thereafter any gains beyond the original buy price is shared on a 30:70 basis.
Potential losses would be managed anotherway. 

housebuyer143

You want to write it in such a way that your daughter gets back her initial £100k investment and the BF his £20k at which point any equity is split 70/30 or 50/50. If you don't ensure the initial return of the amounts out in, they could break up in a few years and he be entitled to more than he put in, even if the house is worth the same. 

Would a 50/50 split of the mortgage be fair, and they have unequal shares or do you just ensure the deposits are returned first and foremost and then you have a 50/50 return.

I imagine the latter is the fairest and best option, so they both split the mortgage but your initial deposit is protected. 

TheJP

Rodders2409 said:

As expected, wise words from you all, many thanks 👌

So...

The JP...you're bang on, and 'we' are trying desperately hard not to fiddle around or over stay our welcome with regards to our DD's life, I've seen first hand how that's nothing but counter productive 🙂. To answer your question, they just want to buy a decent first place together and live a chilled life before settling down, nothing more.

Exodi...thats a wonderfully detailed explanation, thanks for the time you've spent on it, I have a question or two.

I cant quite understand where the combined £10K comes from....£3.6 + £8.4
D : £100k+£3.6k = £103.6k (78.48%
BF: £20k+£8.4k = £28.4k (21.52%)

I understand pondering the morality of the "should I get more?" vs mitigation of risk if theres a reduction in value thinking that there must be a clever way of balancing the offset deposit and mortgage payments over time....but I reckon its too complicated. In the end I've just come to the conclusion of trying to do the fairest thing for both young people because that's what they are and we love both of them.

Also, my understanding is that its much harder to 'seperate' out of a mortgage than it is to get a divorce, in that mortgage companies don't care about any agreed splits in payment etc.. they just want the money. 

So let them buy a decent place together...

My wife's family gave us our deposit, i didn't have the savings but i had the wage. I asked my wife and her parents (we weren't married at the time) how this would work. Their simple answer was that its a gift to us and for us to work out. We agreed 50/50 but i said if it did go sour id give her more. Do you trust your daughters boyfriends intentions? If so let them buy the house and keep it simple, if he's a good guy and it goes wrong he will do the right thing.

MickyandMinnie61

Maybe off topic, apologies if so. My wife is 51 and I’ve just turned 61. We earn between us, 65k and she owns outright a 1/2 bed house in Rhodes, we also have a 30k deposit. How would that appear to potential lenders on a 300k mortgage?

user1977

MickyandMinnie61 said:

Maybe off topic, apologies if so. My wife is 51 and I’ve just turned 61. We earn between us, 65k and she owns outright a 1/2 bed house in Rhodes, we also have a 30k deposit. How would that appear to potential lenders on a 300k mortgage?

It's nothing to do with the thread you've replied to - I would suggest you start a new thread, preferably on the Mortgages board.