Buying A House With Partner

[membrane]

I'm thinking about buying a house with my girlfriend (yes I know what's going to happen, but hear me out.) I'm in the lucky position to be able to buy outright & until recently the GF was unaware of this, when I told her that I would buy us a place outright when the price was right she said she didn't want that as she would never see the house as hers (yeah I know she's a keeper!)

So now I'm in a position where as far as I can see I may as well buy (because a) I've saved half the cost of the overinflated house I'm buying & she can get a mortgage for practically what I'm getting in savings on the rest.) My question is how does this work legally as I want to buy my half with cash & her half as mortgage/part deposit, but obviously want her to get the cheapest deal with my half as part equity. We want a setup where should things go Pete Tong I can walk away with half of the value of the house (however much more/less that is so don't mind sharing that risk) but I don't want any of the mortgage burden should it be in negative equity. Hope that makes sense.

Regards

Membrane

[gilf]

I'm thinking about buying a house with my girlfriend (yes I know what's going to happen, but hear me out.) I'm in the lucky position to be able to buy outright & until recently the GF was unaware of this, when I told her that I would buy us a place outright when the price was right she said she didn't want that as she would never see the house as hers (yeah I know she's a keeper!)

So now I'm in a position where as far as I can see I may as well buy (because a) I've saved half the cost of the overinflated house I'm buying & she can get a mortgage for practically what I'm getting in savings on the rest.) My question is how does this work legally as I want to buy my half with cash & her half as mortgage/part deposit, but obviously want her to get the cheapest deal with my half as part equity. We want a setup where should things go Pete Tong I can walk away with half of the value of the house (however much more/less that is so don't mind sharing that risk) but I don't want any of the mortgage burden should it be in negative equity. Hope that makes sense.

Basically it's not going to happen, if you have a mortgage on the property then the bank will have a charge on it, meaning essentially if the mortgage payments stop they can gain possession regardless of what you put in.

If you are buying it jointly, i.e. both names on the deeds, then you will both be jointly liable for any mortgage.

You won't be able to ring fence your money if you get a bank involved, they are lending you money on the property and their fall back is to sell that property if she doesn't keep her side of the deal, they won't be able to do that if you won't sell. Long story short she will never get a mortgage from the bank in the situation above.

Edited January 18, 2013 by gilf

[LiveinHope]

Basically it's not going to happen, if you have a mortgage on the property then the bank will have a charge on it, meaning essentially if the mortgage payments stop they can gain possession regardless of what you put in.

If you are buying it jointly, i.e. both names on the deeds, then you will both be jointly liable for any mortgage.

You won't be able to ring fence your money if you get a bank involved, they are lending you money on the property and their fall back is to sell that property if she doesn't keep her side of the deal, they won't be able to do that if you won't sell. Long story short she will never get a mortgage from the bank in the situation above.

I have an idea...

You buy it outright and the GF can rent a room, then two, then three until she has paid 50%.

[heresjohnny]

Buy a house with an offset mortgage (we have one from Barclays). This way you will have the joint mortgage but you can offset your savings against the mortgage and not pay any interest. The savings will also be in your sole name. So in our case we have an offset mortgage and we cant see each others "sole" savings such as Cash ISAs. Mentally your girlfriend will see the purchase as a 50/50 but with your savings you have the benefit of not paying any interest on the mortgage (so you're in the same position as if you had bought in cash - difference is you keep your savings but pay no mortgage interest).

[MrPin]

Make sure your "partner" is "good with money", otherwise there will be tears!

[gf3]

Make sure your "partner" is "good with money", otherwise there will be tears!

Very wise or have you leant the had way to.

[MrPin]

Very wise or have you leant the had way to.

All my GFs (except one) have been good with money, but not as good as me!

[Gogled]

You can do this. Will need a solicitor to draw up a declaration of trust

Love & hugs

[membrane]

I'm not worried about selling or losing however much of my half should it all go pear shaped, I just don't want to be left with a mortgage on a house that will probably have lost money & be forced to pay for the whole house, happy to sell at a loss from my "half", just dont want to be liable for the other half.

[FreeFall]

If she's the right person to buy a house with I'd stop worrying about the cash, and just enjoy your lives together.

If you're worried about the security of your money, then (1) definitely speak with a solicitor about the financial arrangements related to the property, and (2) are you sure that buying together is the best idea?

Whichever you decide, focus on what's valuable in life - it isn't always the cash....

[membrane]

If she's the right person to buy a house with I'd stop worrying about the cash, and just enjoy your lives together.

If you're worried about the security of your money, then (1) definitely speak with a solicitor about the financial arrangements related to the property, and (2) are you sure that buying together is the best idea?

Whichever you decide, focus on what's valuable in life - it isn't always the cash....

Your right of course, it's just piece of mind for everyone, she may want to boot me out. Better these things are laid out then everyone knows where they stand, so any parting can be as amiceable as possible, seen too much bitter & twistedness over the years & can't be doing with it. I'm more interested in the legalities (for her to get cheapest mortgage as well), as I said don't mind losing whatever on my half whenever.

[HarryJ]

I'm thinking about buying a house with my girlfriend (yes I know what's going to happen, but hear me out.) I'm in the lucky position to be able to buy outright & until recently the GF was unaware of this, when I told her that I would buy us a place outright when the price was right she said she didn't want that as she would never see the house as hers (yeah I know she's a keeper!)

So now I'm in a position where as far as I can see I may as well buy (because a) I've saved half the cost of the overinflated house I'm buying & she can get a mortgage for practically what I'm getting in savings on the rest.) My question is how does this work legally as I want to buy my half with cash & her half as mortgage/part deposit, but obviously want her to get the cheapest deal with my half as part equity. We want a setup where should things go Pete Tong I can walk away with half of the value of the house (however much more/less that is so don't mind sharing that risk) but I don't want any of the mortgage burden should it be in negative equity. Hope that makes sense.

Regards

Membrane

I have a few suggestions which you could explore.

1) Buy the property outright in your name, Have your girlfriend pay towards the house to you including the rate of interest she would have paid if borrowed, every time she has contributed and cleared 10% of the property value, add a charge on the property land registry paperwork reflecting her contribution.

2) As someone mentioned pay towards the property but minimum, have the remainder borrowed offset aginst your savings with the bank, hence your money safe, and just have your girlfriend pay you her portion of the interest for ½ the property.

3) Buy the property in both your names however have your 50% placed as 1st charge on the land registry deeds, and ringfence the charge in a limited company, hence that money would have to be paid first before the property is every sold, only the surplus would be shared between the owners.

4) You can have the property in both of your names, but have an external Deed of trust document making your external agreement with your girlfriend, have this notaries and hold 2 copies one for each. So when ever it came time to sell it would state that the capital in the property was paid by you, hence only the surplus is divided.

There are various ways you can do this, however as for the loan on the property from the bank as someone mentioned it will be secured against the property and not an individual and hence the bank will always get paid before any other charges on the deed are paid.

[AC44]

have seen too many friends thrown out of their houses..

You ll have to think if/how the situation changes if:

-you have a kid

-you need to get married

I would buy outright and suggest to her that she does not have to pay rent to you, so she can save to buy her own property..

[membrane]

I have a few suggestions which you could explore.

1) Buy the property outright in your name, Have your girlfriend pay towards the house to you including the rate of interest she would have paid if borrowed, every time she has contributed and cleared 10% of the property value, add a charge on the property land registry paperwork reflecting her contribution.

2) As someone mentioned pay towards the property but minimum, have the remainder borrowed offset aginst your savings with the bank, hence your money safe, and just have your girlfriend pay you her portion of the interest for ½ the property.

3) Buy the property in both your names however have your 50% placed as 1st charge on the land registry deeds, and ringfence the charge in a limited company, hence that money would have to be paid first before the property is every sold, only the surplus would be shared between the owners.

4) You can have the property in both of your names, but have an external Deed of trust document making your external agreement with your girlfriend, have this notaries and hold 2 copies one for each. So when ever it came time to sell it would state that the capital in the property was paid by you, hence only the surplus is divided.

There are various ways you can do this, however as for the loan on the property from the bank as someone mentioned it will be secured against the property and not an individual and hence the bank will always get paid before any other charges on the deed are paid.

Thanks for that, I realise any loan is secured against the property & they'll get paid first, I'm just struggling to get my head around something which should be simple, I just want to walk away with half of the house value at the time. it shouldn't be difficult but yet seems to be. Deed of trust seems to be the way forward I think, but I'll look into offset mortgages, there's something else I don't understand. Thanks for the advice.

[membrane]

have seen too many friends thrown out of their houses..

You ll have to think if/how the situation changes if:

-you have a kid

-you need to get married

I would buy outright and suggest to her that she does not have to pay rent to you, so she can save to buy her own property..

If I buy outright I'm circa £125k (won't pay more than £250k cos of the stamp duty theft) down from the start let alone what I'd lose on any interest should the banks start paying any again & remember I believe houses have a lot further to fall hence my reluctance to buy outright which was my original plan, besides I'm not planning on a split (we've suffered each other for 20 years already)

Also with your suggestion of buying outright, if we did have kids, I couldn't chuck them out of MY house, so I'd lose all.

Basically I'm not buying outright because they do not represent value (not even close) & just because I can don't see why I should fund entirely something I believe is seriously going to lose value, but I'm happy to 'lose' half. If I were the biggest bread winner in the relationship It may be slightly different. She wants to pay half & is more than happy with deed of trust or whatever, but as I like you know too many people thrown out, so just nervous being my first buy etc etc . I know it's impossible in today's would, but I just want fairness ....greedy arn't I?

[Anna_1980]

if you have kids, you would not be able to walk with the half of the property, you are under legal duty to provide your kids with the housing until they reach 18.

So, you cannot force the house to be sold etc

[plummet expert]

You can do this. Will need a solicitor to draw up a declaration of trust

Love & hugs

THIS IS CORRECT - YOU CAN RING FENCE YOUR MONEY BETWEEN YOURSELVES BUT NOT QUITE AS FAR AS THE BANK IS CONCERNED IF THERE IS A DEFAULT. THE 'OFFSET MORTGAGE' IDEA ABOVE COULD ALSO HELP, EXCEPT YOU WILL NEED A SIZEABLE DEPOSIT TO OBTAIN AGOOD INTEREST RATE.

[HarryJ]

If I buy outright I'm circa £125k (won't pay more than £250k cos of the stamp duty theft) down from the start let alone what I'd lose on any interest should the banks start paying any again & remember I believe houses have a lot further to fall hence my reluctance to buy outright which was my original plan, besides I'm not planning on a split (we've suffered each other for 20 years already)

Also with your suggestion of buying outright, if we did have kids, I couldn't chuck them out of MY house, so I'd lose all.

Basically I'm not buying outright because they do not represent value (not even close) & just because I can don't see why I should fund entirely something I believe is seriously going to lose value, but I'm happy to 'lose' half. If I were the biggest bread winner in the relationship It may be slightly different. She wants to pay half & is more than happy with deed of trust or whatever, but as I like you know too many people thrown out, so just nervous being my first buy etc etc . I know it's impossible in today's would, but I just want fairness ....greedy arn't I?

I would download the reports from the Halifax and the land registry, and see what the 10 year change is in houses in the area you are planning to buy. Say if the area has prices only 25% above what they were 10 years ago, the area is relatively stable with prices. However if the area prices are still around 70% above what they were 10 years ago they are likely to fall more. Over long term all areas rise relative to new money created, and since the money supply is contracting all areas and countries houses will contract accordingly. Sum at different speeds though.

Also another good measure to test if the area you are buying in is overvalued, see what the rental yield of the property you is buying is if rented on the open market (regardless if you are going to rent it), if the figure is close to 10% the property is ok valued. If it is over 10% the property is likely to be undervalued. And if the yield is like 4%, you can safely say that you may risk loosing 50% of the value of the property unless rents rise in the area.

[HarryJ]

Thanks for that, I realise any loan is secured against the property & they'll get paid first, I'm just struggling to get my head around something which should be simple, I just want to walk away with half of the house value at the time. it shouldn't be difficult but yet seems to be. Deed of trust seems to be the way forward I think, but I'll look into offset mortgages, there's something else I don't understand. Thanks for the advice.

There is an option i just thought of which will eliminate your mortgage liability.

Follow the below, your legal advisor will able to expand on the wording to make it fancy..

1) Have the following burden stated on the land registry deeds “No sale by a sole proprietor or trust corporation, without court order”

2) Have the following burden placed on the land registry deed “No sale of the subject property without prior written permission from YOUR NAME AND ADDRESS”

3) Place a Charge on the property for your 50% Contribution and the amount in £.

4) Make a Deed of trust with your girlfriend that you shall state your 50% contribution plus ½ of any uplift of the property.

Now you can freely place the property in only your girlfriends name,, and state her as the trustee of the estate, this way you go not take any legal liability for the loan on the property from the bank but also you have protected your financial interests. Even if your girlfriend was unable to pay the mortgage in the future or was made bankrupt your interests in the property would be legally protected.

Regards

[membrane]

There is an option i just thought of which will eliminate your mortgage liability.

Follow the below, your legal advisor will able to expand on the wording to make it fancy..

1) Have the following burden stated on the land registry deeds “No sale by a sole proprietor or trust corporation, without court order”

2) Have the following burden placed on the land registry deed “No sale of the subject property without prior written permission from YOUR NAME AND ADDRESS”

3) Place a Charge on the property for your 50% Contribution and the amount in £.

4) Make a Deed of trust with your girlfriend that you shall state your 50% contribution plus ½ of any uplift of the property.

Now you can freely place the property in only your girlfriends name,, and state her as the trustee of the estate, this way you go not take any legal liability for the loan on the property from the bank but also you have protected your financial interests. Even if your girlfriend was unable to pay the mortgage in the future or was made bankrupt your interests in the property would be legally protected.

Regards

Hmmm thanks for that, feel a little google time coming on

[porca misèria]

If you trust each other ... lend her the money to buy a half share. Own jointly, and she owes you money instead of the bank.

Could be a startingpoint?

[markyh]

If you trust each other ... lend her the money to buy a half share. Own jointly, and she owes you money instead of the bank.

Could be a startingpoint?

One thing no one has ask the OP here yet. Does he currently live with his girlfriend and has he done so for a good few years? The reason I ask is that if they are currently in good boyfriend \ girlfriend relationship but live apart and have their own space (even if they "sleep over" each others places 4 nights a week) it's a completely different dynamic to living together 365 days a year.

Loss of space \ freedom and intolerance caused my 10 year relationship to fall apart after only 3 years of buying and living together. And the bitter pill was I could have bought the house without my ex, she did not earn enough to buy without me, and I put down 80% of the deposit.

But being in love we just got the standard joint mortgage with nothing special in the deeds and when we spilt in 2000 it cost me £15k to buy her out despite the fact she only out down £1k of the deposit.

If this was me now I would go down the joint offset mortgage route and keep as much of my cash as possible in my side of the offset savings account and not on deposit in the property as well as having watertight deeds as others have suggested.

M

[membrane]

I've lived with my partner for over 10 years & I do trust her, she's holds many K's of my money already (ISA allowances & unit trusts) admittedly money that I could just withdraw as I have her log in details, but I think I'm just cautious of killing the goose that lays the golden egg really & being paranoid, but I've seen so many people commit & lose out badly, I don't want to be another victim, I'm not nave to think I just struck lucky. Still not sure about the offset mortgage as is like to buy another house outright to let out, once they are fair value (several years from now if form is anything to go by.) love to hear others points of view, see if I can make some sense of it all.

[Democorruptcy]

I'm thinking about buying a house with my girlfriend (yes I know what's going to happen, but hear me out.) I'm in the lucky position to be able to buy outright & until recently the GF was unaware of this, when I told her that I would buy us a place outright when the price was right she said she didn't want that as she would never see the house as hers (yeah I know she's a keeper!)

So now I'm in a position where as far as I can see I may as well buy (because a) I've saved half the cost of the overinflated house I'm buying & she can get a mortgage for practically what I'm getting in savings on the rest.) My question is how does this work legally as I want to buy my half with cash & her half as mortgage/part deposit, but obviously want her to get the cheapest deal with my half as part equity. We want a setup where should things go Pete Tong I can walk away with half of the value of the house (however much more/less that is so don't mind sharing that risk) but I don't want any of the mortgage burden should it be in negative equity. Hope that makes sense.

Sounds like you have doubts. Maybe the best idea is to find a wealthier woman and move into her mortgage free, very large and expensive house?

(I wish someone had told me that and suggested a woman a few years back....)

[porca misèria]

Sounds like you have doubts. Maybe the best idea is to find a wealthier woman and move into her mortgage free, very large and expensive house?

Where do I find her? Wealthy women always seem so scary!