Best scenario for new house and mortgage with girlfriend?

[CarrotsAndCake]

Hi all, I need some help regarding potentially buying and moving house, whilst taking into consideration my girlfriend and potential new mortgage.

Situation:
I own current house in my sole name and my mortgage. House worth £270k, my mortgage is £140k and I have £100k inheritance banked. So call it £210k cash to play with including room for stamp duty and legal fees.

I want to move house and upgrade. Next house value around £460k, so with a £210k deposit I need a £250k mortgage. My girlfriend has no money saved so can not contribute to the purchase. However, I’m happy for her to somehow build up a share in the property and to help me out with the mortgage repayments (joint mortgage)? Equally though, as she has no deposit, would I go down as sole ownership on house?

I also want to protect myself if the worst was to happen. I have been divorced once so do not want to lose money again. I don’t plan on getting married again either but still need to ensure that if we split, she can’t claim any of my money that I put in. But if she was able to build up a share, then obviously she’d be able to get her bit back if we were to split(?). Or do I simply go at this alone and she just pays me “living expenses” on the side? What about a cohabitation agreement? I could just about afford the monthly repayments on my own, but if she paid me on the side say £600 per month for living expenses/bills etc that would be a big help for me- but then she’d not be building up anything in the house whatsoever. Equally, if she was on the mortgage with me then her contributions makes it easier for me each month too. Maybe there’s some percentage split we could do but again, as she has no money to contribute to the deposit, perhaps not?

What’s the ideal setup for all of this? Advice and help appreciated.

Salaries are £54k and £27k.

Edited by CarrotsAndCake on Monday 10th April 08:40

[Voldemort]

If the roles were reversed would you be happy?

[grumbledoak]

Does your girlfriend understand that you don't plan getting married again, and are looking at protecting your cash?

I suspect you should have that chat before buying the house together.

[2 GKC]

Are you seriously suggesting your girlfriend pays you £600 a month living expenses?!

Deed of trust should help you keep your share

[CarrotsAndCake]

Voldemort said:

If the roles were reversed would you be happy?

This is why I’m looking for the best scenario and looking to see if there’s a way for her to get onboard and build up a share, whilst I protect my big deposit and my share…. What’s unfair about that? Any suggestions?

grumbledoak said:

Does your girlfriend understand that you don't plan getting married again, and are looking at protecting your cash?

I suspect you should have that chat before buying the house together.

Yes- we’ve had that chat.


Another thing to add, what if the property increases in value? Who owns what percentage of the increase from original purchase value? This all seems like a minefield.

Edited by CarrotsAndCake on Monday 10th April 08:55

[Voldemort]

CarrotsAndCake said:

Voldemort said:

If the roles were reversed would you be happy?

This is why I’m looking for the best scenario and looking to see if there’s a way for her to get onboard and build up a share, whilst I protect my big deposit and my share…. What’s unfair about that? Any suggestions?

It was a fairly simple yes/no question.....

[Caddyshack]

A lot of people do this and it is quite sensible.

Buy tenants in common and get a deed of trust written that agrees how the equity would be shared in each outcome. The deed of trust can be challenged so I would strongly encourage you to get the partner to take her agreement to another independent solicitor and have them document that they read it to her, she understood it and agreed with what it says.

[E63eeeeee...]

The ideal arrangement is whatever you're both happy with.

Possibly the most financially fair option, you can split the house into four shares. You own three - two from the deposit and one from your half of the mortgage, she owns one from her half of the mortgage. Any increase in value is split evenly between the shares.

Alternatively you could agree to share any increase in value 50:50 assuming you'll be working on it together. Might be a more emotionally fair approach and conducive to a more successful relationship, but potentially make it slightly harder to buy her out if it does all go pear shaped.

Her effectively paying rent is possibly not conducive to a long term relationship, but maybe that's where you're at.

Personally, I'd be prioritising the relationship, but there will be plenty of people along to tell you you're getting ripped off and ultimately only you can decide what you're actually prepared to risk financially for the relationship.

[Sheetmaself]

We have done a deed of trust so my deposit remains mine, hers remains hers, anything paid off whilst together is shared value as is any increase or decrease.

Seemed reasonable to me.

[CarrotsAndCake]

Voldemort said:

CarrotsAndCake said:

Voldemort said:

If the roles were reversed would you be happy?

This is why I’m looking for the best scenario and looking to see if there’s a way for her to get onboard and build up a share, whilst I protect my big deposit and my share…. What’s unfair about that? Any suggestions?

It was a fairly simple yes/no question.....

I’m impossible to say yes/no when there are multiple options with nothing decided. Thanks for your useless advice.

[CarrotsAndCake]

Sheetmaself said:

We have done a deed of trust so my deposit remains mine, hers remains hers, anything paid off whilst together is shared value as is any increase or decrease.

Seemed reasonable to me.

Thank you. Assuming you are both on the title as tenants in common? My girlfriend does not have a deposit to contribute.

[CarrotsAndCake]

E63eeeeee... said:

The ideal arrangement is whatever you're both happy with.

Possibly the most financially fair option, you can split the house into four shares. You own three - two from the deposit and one from your half of the mortgage, she owns one from her half of the mortgage. Any increase in value is split evenly between the shares.

This sounds good. So the increase in value I get 3/4’s and she’d get 1/4? If so, I believe that’s reasonable because without me, she wouldn’t even be able to get on the ladder to start with. So at least she’d be able to build up a share from the mortgage plus some increase. Is that how that would work? Then assume we’d go on as tenants in common with a declaration of trust attached highlighting those splits?

Edited by CarrotsAndCake on Monday 10th April 09:43

[markymarkthree]

The two of you need to have chat with a solicitor who specializes in this sort of stuff. Wise move by they way.

[Dsdans]

I’m unsure of all the legal implications here, and hopefully someone more knowledgeable will hopefully be along to advice but
Would an offset mortgage be a potential solution?
You limit your deposit exposure to say 10% and then agree a % of the mortgage repayments?
At a time in the future when you “know” you’re settled you can choose to use that to pay off the mortgage and reduce your monthly payments. The first hurdle however will be the higher monthly payments

[Puzzles]

New house is £460k

You put down a £190k deposit.
The mortgage of £270k is paid 50/50.

You own about 70% of the house, she owns 30%.

[CarrotsAndCake]

Puzzles said:

New house is £460k

You put down a £190k deposit.
The mortgage of £270k is paid 50/50.

You own about 70% of the house, she owns 30%.

I want to protect 100% of my deposit. Rightly so.

[Lincsls1]

CarrotsAndCake said:

Puzzles said:

New house is £460k

You put down a £190k deposit.
The mortgage of £270k is paid 50/50.

You own about 70% of the house, she owns 30%.

I want to protect 100% of my deposit. Rightly so.

So, you buy house as planned.
In the event there is a relationship breakdown, the house should be valued. If the house is worth say 25% more than it was, then your portion is (190+25%) £244k + 50% of the rest?

[hotchy]

I no you don't want married again etc and I don't know your age but she could end up with a child and you are not getting that house again for 18 years +. They'll need kept in it etc etc.

I personally would not move in with a girl if they've not got a penny to there name anyway. Especially if iv got alot to loose. The law seems to lean heavily towards the female in that regard.

See how she reacts to the situation. If she seems in anyway annoyed that you want to protect yourself then don't even entertain moving in with her.

From the burnt piston head brigade.

P.s. hopefully it works out great and you grow old together etc etc.

[AdamV12V]

Puzzles said:

New house is £460k

You put down a £190k deposit.
The mortgage of £270k is paid 50/50.

You own about 70% of the house, she owns 30%.

This ^^ (give or take with your final maths based on the exact sum you end up putting in).

Define it in a Deed of Trust. You can draft this if you feel confident enough, and the solicitor can check and attach as part of the registration of the property, or a solicitor can draft it for you, but they will charge you for it. If you draft it then, state it in clear terms what percentage of the remaining equity is split. This must be cleared stated as the equity after paying off the mortgage and all other sale costs, such as (but not limited) to estate agent fees, solicitors fees and mortgage admin fees.

Then as you mention when apply for the mortgage and when you register the property at the land registry you should be entered as tenants in common subject to the deed of trust, rather than as joint tenants, and the deed of trust attached to the land registry registration.

So then, as above, the mortgage is 50:50 (because they always are), but your additional equity is protected on exit.

Paying you housekeeping etc isn't going to carry any real weight or protection, and as said above is more likely to build resentment over the years. Its ammo to throw at each other if you have any arguments - even if you don't think that's likely now. Instead you should endeavour to pay all housekeeping bills equally, maybe setup a joint housekeeping bank a/c to pay everything out of and pay the same amount into it each whenever needed, or monthly if you prefer to budget like that.

This allows you to keep some financial freedom too, but again be careful that she doesn't end up miserable all the time because she has no spare cash as all of hers is going into the house, whilst you have cash to splash on toys/gadgets. She will likely very quickly resent things if this is the case, especially if she does more of something in your relationship, housework, running the kids to school or whatever it is. Again things like this case build up resentment, so ensure she has spare cash to enjoy life too. Or simply go all-in and have shared bank a/cs for everything, but again that can build resentment the other way too. There's no easy way when you earn twice as much as her, so no magic answer here - you have to work this bit out between yourselves, but always remember to be fair to each other.

[Voldemort]

CarrotsAndCake said:

Voldemort said:

CarrotsAndCake said:

Voldemort said:

If the roles were reversed would you be happy?

This is why I’m looking for the best scenario and looking to see if there’s a way for her to get onboard and build up a share, whilst I protect my big deposit and my share…. What’s unfair about that? Any suggestions?

It was a fairly simple yes/no question.....

I’m impossible to say yes/no when there are multiple options with nothing decided. Thanks for your useless advice.

I wasn't offering advice. I was asking you if you would be happy to move in with your g/f if it was her house and you were paying every month without getting any equity in the property, which is what, it seemed to me from your op, was the status you were hoping to have validated by all the powerfully built company directors on here.