I want to buy a house but...

[Al U]

Looking for some advice with a certain predicament I am in at the moment.

Basically, my partner and I are looking to get a mortgage in the near future. I am a company director (not powerfully built) and she is a permanent employee but has a bad credit rating (very long story, not her fault and not much we can do about it).

This means that we are struggling to get a mortgage together, basically the broker I am dealing with has said we will be able to get one but the interest rate will be high. I earn enough to get the mortgage on my own through a specialist broker with a decent interest rate, so what I am thinking is to get the mortgage on my own. The problem with this is that on paper my partner will have no ownership of the property. We are currently engaged, my thinking is that if I am the sole owner and we get married and were to get divorced that she would get 50% of the property anyway right?

I am just looking for a way to be the sole owner of the property but have some other way that my partner would have a stake in the property if we were to split up. Make sense?

[The Beaver King]

Usually these threads are asking the reverse!

You'll need to speak to an expert, but as long as she is contributing towards it, I believe she has some rights if you ever split up (i.e. you'd have to buy her out etc).

Once you're married, can you not just add her onto the mortgage? Would it bounce the premiums up that much?

Do you have a joint account together? By being financially linked to you, it should help pull her credit rating up in a few years anyway.

I find it odd that having 1 good credit rating and 1 bad crediting rating gives a higher interested rate than 1 good credit rating on its own. Finance is weird...


ETA - There is a finance section on PH and the people in there are pretty good with the advice, plus there are few people in the industry. Might be worth asking in there.

[valiant]

Might want to post this in the finance sub forum.

There's a Pher on there called Sarnie who is a broker and often gives very helpful advice about nonstandard mortgage applications.

[Al U]

I'm not really familiar with the finance forum to be honest, I thought that was usually for stocks and things like that. I thought it would be more of a "law" query as I think that a conveyancer is the sort of person that would probably understand the situation best.

I know it's usually the other way round but that's the thing she would be contributing to the mortgage and the deposit, so I want there to be a way for her to have a guarantee of a stake in the property if the worst should happen. Regarding putting her on the deed after getting the mortgage I don't think I can do that as I have been told by the broker that the mortgage company will require anyone on the deed to be on the mortgage too. I'm thinking there must be a legal way round it I just don't know what!

[Sheepshanks]

The Beaver King said:

I find it odd that having 1 good credit rating and 1 bad crediting rating gives a higher interested rate than 1 good credit rating on its own. Finance is weird...

Makes sense - there's a risk the bad person could carry on that way and take the good person down.

Al U said:

.. I want there to be a way for her to have a guarantee of a stake in the property if the worst should happen.

Is she asking for this, or just something that you feel would be 'the right thing to do'?

[Al U]

No she has not asked for it as such but when I mentioned that I could get the mortgage in my name only she did say that she wouldn't be comfortable with it because she would have no stake in the property which is fair enough as she will be contributing significantly to both the deposit and the monthly payments. I have no problem whatsoever with that, if it was the other way round I would feel the same. At the end of the day, I wouldn't ever want her to just stay with me because she had money tied up in the house that she couldn't get out if that makes sense.

Also if she cheated on me for example with my best friend (a worst case scenario) I wouldn't want the choice to take her to the cleaners as such, I'd rather it is a fair split from a financial point of view at least.

[Rangeroverover]

You can draw up an agreement between you, you should each see seperate lawyers, if you try to register a charge for her your mortgage company won't like it.

I did this in the past, I agreed she would get x% of the equity, alas over the years this didn't take into account the considerable cash sum I spent on improvements, so when we split she probably did much better than was intended when we struck the original deal

[BobSaunders]

Can you add her to the land registry, but not on the mortgage?

[Al U]

Rangeroverover said:

You can draw up an agreement between you, you should each see seperate lawyers, if you try to register a charge for her your mortgage company won't like it.

I did this in the past, I agreed she would get x% of the equity, alas over the years this didn't take into account the considerable cash sum I spent on improvements, so when we split she probably did much better than was intended when we struck the original deal

I assume the mortgage company didn't know about this?

[Al U]

BobSaunders said:

Can you add her to the land registry, but not on the mortgage?

Would that give us any problems when we need to remortgage for a better rate etc?

[Muncher]

BobSaunders said:

Can you add her to the land registry, but not on the mortgage?

No.

[TooMany2cvs]

BobSaunders said:

Can you add her to the land registry, but not on the mortgage?

No mortgage lender will allow that.

Think of it from their point-of-view... The borrower fails to pay, they go to repossess - but can't, because they only have dibs on half of it.

If the lender won't lend to the OH, then you're going to have to have it in one name only. There might possibly be a tiny handful of edge cases, but if you're relying on some kind of self-certification or whatever to need to go to "specialist lenders" anyway, you're already narrowing the field massively.

In terms of divorce settlement (nice bit of positivity there!), there's no hard-and-fast rule that "Mrs gets half" - it'll all depend on relative finances and assets, especially if the marriage is short enough to not give her time to rebuild her credit record and you get remortgaged, and there's no kids involved.

(I struggle to see how somebody can have a terrible credit record through no fault of their own, though, but that's another issue entirely...)

[Al U]

To be fair, I didn't think anyone could have a terrible credit rating through no fault of their own until we found out how my partner's credit rating had been tarnished without her having any knowledge of it happening.

Anyway, I get what you mean about the whole repossession thing, makes me think I won't be able to get an agreement between us drawn up either. Struggling with what to do here really, a part of me thinks I could just save longer so I put down all the deposit and she can live with me and pay half of the mortgage as rent?! Doesn't really sound like a husband and wife type of agreement though, if she was just a girlfriend then maybe.

It isn't self certification either by the way, that stopped a long time ago. Basically as limited company directors means of salary is a lot more complex than a permanent employee, specialist brokers are required as highstreet banks won't touch you unless you have a decent PAYE salary.

[AyBee]

As someone else has said, speak to Sarnie who's an expert on mortgages so may be able to find something that works for the both of you

[Al U]

OK will try to find him/her, thanks.

[anonymous-user]

Apply for and get the mortgage in your name, wait 'x' months and add your partner to the mortgage if you can, if not just add her to the Land Register / Deeds, job done, then once her bad credit is resolved add her to the mortgage.

I know you can pay brokers etc but I spent a bit of time on the phone with different mortgage providers and sat down with two or three, I found those in the banks generally more informed and understood the different products and what / how it would work for me.

Edited by Trexthedinosaur on Monday 17th August 13:31

[TooMany2cvs]

Al U said:

It isn't self certification either by the way, that stopped a long time ago. Basically as limited company directors means of salary is a lot more complex than a permanent employee, specialist brokers are required as highstreet banks won't touch you unless you have a decent PAYE salary.

Yes, I thought you were going to say the old dividend-instead-of-salary trick... Nothing to do with directorships, everything to do with majority shareholdings.

[Al U]

TooMany2cvs said:

Yes, I thought you were going to say the old dividend-instead-of-salary trick... Nothing to do with directorships, everything to do with majority shareholdings.

It's not much of a trick to be honest, just increasingly necessary in the industry I'm in. Let's not send this off topic though please.

[TooMany2cvs]

Al U said:

TooMany2cvs said:

Yes, I thought you were going to say the old dividend-instead-of-salary trick... Nothing to do with directorships, everything to do with majority shareholdings.

It's not much of a trick to be honest, just increasingly necessary in the industry I'm in. Let's not send this off topic though please.

Oh, absolutely. But the point I was making stands - you're already cutting down the field of potential lenders massively, so looking for edge-cases over differences between names on the mortgage and names at LR is going to be even more difficult. If you've got enough years of accounts, though, most lenders should accept the situation.

[Al U]

I appreciate it is a difficult situation made more difficult, believe me. I just thought I would ask on here to get an idea of where I stand before spending time trying to find a local conveyancer or solicitor to discuss it with.