Joint Tenants or Tenants in Common? Advice needed!

[FloweryDuchessa]

DP and I are buying our first house! It's all very exciting but I'm struggling to understand if it would be better to be joint tenants or tenants in common. We are not married and I'm from a country which doesn't have

We are getting a joint mortgage but I'm bringing in the deposit but we can only get such a good mortgage because of his wage. He earns more than I do and I wouldn't be able to get a mortgage on my own because I'm a contractor so we are getting a joint one. We've spoken this through with a broker etc and it's all sorted but now we have to decide on the tenancy.

He wants to own the flat 50/50 but how do we get there if I've already paid 100k of the value through the deposit and then we plan to pay the mortgage off together. I guess he'll say that he'll pay off bigger chunks of it with his bonus.

I don't want it to be tit for tat counting who pays what but I want to protect myself should we end our relationship.

Is it better to be joint tenants and trust he'll pay off 100k of the mortgage through bonuses or tenants in common with different ownership percentages? Help!

[FloweryDuchessa]

oops didn't finish the first bit! I'm from a country where when you buy together its automatically 50/50, so I don't understand the impact of being tenants in common owning different amounts of the same house.

[Greengrow]

You can be tenants in common and own 50% each by the way as well. If one of you dies and it is tenants in common it goes as under your will or if no will to your family. So if you know you would not him having your share on death then I would go for tenants in common. Even if it's 50/50 I would go for tenants in common.

If it's joint tenants then when you die it automatically goes to the other and I think falls outside your estate too and might even be outside inheritance tax.

As you are not married my feeling is you would both be better off with tenants in common.

The next question is whether it should be TC with 50% shares or some other percentage. In the early years of a repayment mortgage very little is repaid so if you split in say 5 years which is not that usual you still may be £100k up on him re capital so something like 80% you and 20% him might work. In later years if you earn less and less (although bear in mind I earned 10x my husband eventually and am self employed - often those who work for themselves well out earn employed partners) and the place shoots up in value you will probably be glad it was 50/50.

I would probably go for 50/50 tenants in common making a will at the same time and very important putting any life insurance in trust for the other person (which is easily done on the life insurance forms and ensures the life insurance money is outside inheritance tax) and they can use it to repay the loan. You might in addition want a written contract signed by both of you ideally written by a solicitor which says that notwithstanding the 50/50 TC if you split in the first say 5 years you are paid in addition the £100k back first from the proceeds of sale despite the 50/50 split, if the lawyers think that is possible.

[NameChange30]

If you're not married and buying a house together, and one of you is paying £100k deposit, that's a lot of money and I think it's reasonable for you to want to protect your investment.

How do the two of you plan to pay off the mortgage? Will you contribute 50/50 or will he pay more because his salary is higher than yours?

It depends how much the house is and how much you will each contribute to the mortgage, but hypothetically, if the house is £300k and you split the mortgage payments 50/50, you should own 2/3 and he should own 1/3.

I'm not a legal expert though (that's just what I think is "fair"!) and you should definitely get legal advice for something like this. Could you ask the solictor who is doing the conveyancing for the purchase of your house?

If you search online for "joint ownership" you will find more information and advice, e.g.
england.shelter.org.uk/get_advice/Buying_and_selling/finding_a_place_to_buy/joint_ownership

[NameChange30]

PS Cross-posted - greengrow's advice sounds sensible to me!

[FloweryDuchessa]

We would be paying the mortgage and insurance 50/50, I'm not sure about the other bills. We currently split things a bit differently, he pays the electric, water and those bills while I pay for food, our cleaner, random house related things. It vaguely works out evenly.

For clarity the flat we are buying will probably be around 600-650k and we can pay back 10% of the mortgage within the first 2 years since it will be fixed for 2 years.

We will be having a declaration of trust drawn up to say who is paying for what and whether its we will be joint tenants or tenants in common. I'm leaning towards tenants in common with a clause saying that if we sell within 5 years then I get the 100k back and we divide the rest 50/50 if there are increases in value. Does that sound ok?

[CaleyThistle]

If you are splitting the mortgage 50:50, as AnotherEmma says above, you ought to own (350/600) 58% of the property.
I'm afraid I don't understand your comment about paying back 10% in two years. Is this your OH's bonus, and if so, is it feasible to hold off on buying until he can raise a contribution towards a deposit?

[3littlefrogs]

Definitely go for tenants in common.
If joint tenants, if one of you dies your half automatically goes to the other.
You can't leave it to anyone else.
You need legal advice though if you have already paid £100K though.

[notbloodybranston]

You need to be tenants in common.

Your solicitor will draw up a deed so that if you end the relationship and sell the house, you will receive back the £100k deposit you put in and any remaining equity (profit) will be split equally between you (if you have equally paid the monthly mortgage repayments.

[FloweryDuchessa]

caley My point about paying back 10% is that DP could in theory do this and then it might eventually over a number of years even out the 100k, but I didn't explain myself very well.

3littlefrogs I haven't paid anything yet, our offer is yet to be accepted and we are going to use solicitors for everything but I just wanted to know how much to stress the point of unequal shares.

What happens if we get married? Does it just become joint at that point?

[Greengrow]

Yes, I think we seem to be agreeing on this:
"I'm leaning towards tenants in common with a clause saying that if we sell within 5 years then I get the 100k back and we divide the rest 50/50 if there are increases in value. " Though if you play to pay 10% of £650k back in 2 years and all of that has come fro his bonuses if I were he I would be wanting that £65k also taken account of. If the 10% will be paid back equally by both of you then the first suggestion TC 50/50 with first £100k back to you would be fairest.

if you get married then it doesn't matter whose name things are in and even pre nups are not enforceable - instead you add up each party's assets and liabilities and in some cases spilt that 50/50. So if you did marry and still wanted to protect your £100k you should probably both have separate lawyers and try to draw up a pre nup although they are not necessarily enforceable if eg he were a stay at home father by then with 2 toddlers and you earned the money and giving him the house including £100k equity was the only way to house the children then if the pre nup said you got it the court might tear that up. You can cross that bridge when you come to it. My parents had the house as joint tenants and then after 30 yars my father worried my mother would die last and give it all to the cat's home or whatever so he "severed the joint tenancy" which you can do at any time if it is joint tenancy to ensure at least his half was left to us children.

[FloweryDuchessa]

Greengrow thanks for all your help. It has clarified in my mind what I need to do to protect myself and a bit more on how to do it and slit things.

Thanks to everyone who has posted!

[BigPawsBrown]

I wouldn't name the 100k as a fixed amount because if the house quadrupled in value (is it london? It may do!) then you've devalued your share.

I would own as tenants in common unless married because civil and common law stuff in the UK is made up and crap.

I would say you get 1/6th of the value in the event of a sale plus 50% of the equity made up of repayments.

[Collaborate]

I'd suggest you hold under a TC. 50/50 after you each get back your respective capital contributions, including your £100k and any capital you individually repay over and above monthly payments (for which there would have to be a clear paper trail).

[NoMarymary]

It can be written into the contract the solicitor draws up that you have put in the initial £100k deposit. Bank statements will confirm this and also (during the lifetime of the mortgage) that you have contributed equally. If you decide to separate your deposit will be take into account when dividing the assets and this additional amount given to you back. This has been the experience of my BIL recently.

As an extra safeguard I would ask the solicitor to spell this out in the documents.

[Mini05]

We did this tenants in common
I put down £78k he nothing but he pays the mortgage. The house was then 160k so 80k me 80k him mortgaged. When we went to the solicitors the next day she rang me as she was concerned about me put 78k down and not protecting it INCaSE OFF

You obviously live South! With property that price !!

We are now 11 years on, and things are quite different, to the point of splitting up. So it does happen!

If you are both paying the mortgage 50/50 then you have obviously put more in??
Defo tenants in common and if your solicitor doesn't suggest this then I would get somebody else as they are not looking after your interest.

Re the bills etc why not give an estimated figure of each, add them up and split 50/50. That seems fair.
As to your 100k(which is a lot of money) I would really think about it as it can't be 50/50

If the house is 600k could you put 30k and he 30k then split everything 50/50 including the bills maybe as suggested.