How to fairly bring my partner onto the mortgage and title?

[scz4]

Morning all,

Looking for some advice which is fair to both of us.

Partner and I have been living together for 2.5 years after she sold her place. I bought the house 5 years ago following a divorce and due to remortgage in the coming months, so now feels like the right time to bring her in.

If you ignore the buying costs and money I've spend on the house over the last 5 years, we'll both be putting the same money in monthly and any over payments. Suspect the house will be valued around what I bought it for, leaving a loan to value ratio of about 30%.

We have agreed that should the worst happen and we were to split, that I would have first refusal on retaining the house. Simple.

Naturally I would need to buy her out, but how do you fairly calculate this when you take into consideration any change in value (up or down), money spent maintaining\upgrading the house and contribution to the mortgage (which we'll split evenly). We would like this legally documented.

Does anyone have any experience of this? As I said, just want it to be fair for both of us and of course, I hope we never need to, but if life has taught me anyway over the years, it's to prepare for the unexpected.

In my previous marriage it was really simple, we sold up and split the capital evenly as neither of us could afford to keep the home, nor really wanted to.

Oh and we're both based in Scotland if that makes any difference to the legal side of things.

Edited by scz4 on Friday 16th August 14:06

[Redline88]

Yes, would you OH be putting any lump sum additional amount into the property at the time of remortgaging?

From what you’ve said above, I would consider the existing equity in the house to be your contribution - you can then just split the equity on a proportionate basis.

[scz4]

Redline88 said:

Yes, would you OH be putting any lump sum additional amount into the property at the time of remortgaging?

From what you’ve said above, I would consider the existing equity in the house to be your contribution - you can then just split the equity on a proportionate basis.

Yes she would. So to keep things simple, lets say the house is worth £3. I'll be putting in £1 (current capital in the house), she'll put £1 in from her savings and we'll have a joint mortgage of £1.

So based on your suggesting and again hopefully it won't happen, but if we split in 5 years time with have just 50p left on the mortgage, are you suggesting I would just buy her out at £1.25 assuming the house is still worth £3? What if it's worth £3.50? Would I give her £1.50?

What about money we've spent modernising the house? Which add value in some circumstances, but not always.

Should we consider interest?

Perhaps I'm over thinking it, but again just want it to be fair for both of us.

[StuTheGrouch]

If she buys into the house (the lump sum), then all is equal, surely? Just go on what the house is worth rather than what you've spent.

[TownIdiot]

Easier to think in percentages surely?

In this scenario you'd get the house valued and pay her 50% of the equity.