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Buying property with DP - uneven deposits, advice needed(35 Posts)
DP and I want to buy a property together soon. Currently we live in my flat and he pays towards the bills. I have approx 30k equity in the flat.
DP had around 80k saved for a deposit and our original plan was to buy jointly with a deed of trust protecting our separate share of deposit with a mortgage for the remainder. However he has recently been lucky enough to be gifted a significant sum of inheritance, around £500k, which would allow us to live mortgage free.
This has raised a few questions as to the best way forward. We still want to live together but I also still want to build up an asset as I won’t be paying into a mortgage if we live mortgage free.
1 - We jointly buy a property of higher value allowing us to take out a small mortgage and ‘contribute’
The relative gifting the money has stipulated it can only be used to buy a house.
2 - I keep my flat as investment and let this - although I’m a little shy of 25% equity for a BTL I can get consent to let in the short term.
If scenario 2, presumably this would mean DP buying the property in his own name which I’m worried will make me feel ‘less’ of a right to live there, have decisions on decor etc.
Or 3 - I sell my property, use the cash towards the new and then use the money I would have paid into a mortgage and put it in savings eg a LISA.
We are both in our late twenties with a joint income of around £80k so could take on a mortgage relatively easily.
How long have you known each other?
I'd be tempted to keep my flat. Move in to his solely owned property...see how it goes.
Keep your flat.
If it doesn't work out you've a place to go back to, if it does work maybe you'll get married and it'll all become irrelevant anyway.
We are engaged, so hopefully it will turn into a marriage!!
The only hesitation with letting the flat is that I’ve been a landlord before and it’s a lot of hassle for little financial reward, especially with the tax changes.
If you're getting married and planning kids then I'd just pool all your finances now and stop worrying about what's "yours" or "his"
* it’s a lot of hassle for little financial reward, especially with the tax changes*
As it should be.
The reward for you is having a back up plan and a some equity that isn’t shared with him.
On your ‘savings’ scenario, why would you want to lock your money away in a Lisa until retirement? If you needed access to that cash you would get less back than you paid in due to the regulations.
Stocks and shares isa would be a far better investment and gains are tax free.
I’ve heard of weird Will conditions but are they actually legally enforceable? What’s to stop someone buying a house then selling it and pocketing the cash?
How much is left on the mortgage for the flat? If you can overpay when it’s next due for renewal could you put your 30k deposit into the flat to pay it down which would increase your profit month to month
You could sell the flat and put the money you would have used to purchase the house with DP into a more suitable buy to let property? Over pay on the BTL mortgage and then buy an additional BTL property when you can.
I actually think you should take some legal advice.
We are in Scotland so Scots law. When we married we had a house each. When I sold mine, the lawyer advised that should we split, DH would be able to claim on my cash as it was something that I gained during the marriage regardless of where the money had come from.
However as he'd owned his house from before the marriage I'd only be able to claim on the difference between its value at the point of marriage and the value at divorce! But he couldn't sell without my permission as it was a marital home.
One answer is for you to have some long term investments, ISAs or endowment policies that you pay into. But you need to take into consideration what you plan to do with maternity leave and if you plan to return to work full time after children.
He buys the home outright. You live there. If he pulls ranks and doesn't allow you any input into the decor, etc, he's not the person you need.
Keep your flat. Don't over do the rent, it's not an income. But it's a viable bolthole. If it all works out in life, then it's a pension. Or home for future children.
And get a prenup. Anyone with assets should.
But that's just based on my life experience, and the fact that I would never fully trust anyone, ever, again.
When my son and his future wife bought their first flat she put up the deposit and they paid equally for the mortgage. He had a legal document drawn up by the solicitor stating that the deposit was from her and that if they split up she was to receive more from the sale of the flat. Happily they are still together 20 years later.
Can he 'be your mortgage'? So he in effect loans you the money for half and you pay him back monthly, as you would a mortgage. You could properly document it but it would mean you don't have to pay interest like you would with a bank. In the event that you were to split, you are entitled to whatever you've paid into the value of the property (so if you paid 12 months of £1k, you'd be entitled to say £12k of equity on sale).
On the other hand, if he doesn't own any properties the stamp duty charge would be less if he buys in his sole name and you aren't married.
You could pay more for your flat to be fully managed. You’ll make a little money from rent but also (hopefully) see an increase in the value of the property. That’s the real point.
This is quite complicated OP. I would definitely keep your property. Invest your deposit money into that if it's safe. Rent it while you live with your OH. And then I guess it will just have to be how the relationship pans out, if things stay really serious you will need to get put on the deeds of the house. A few years down the line, you might choose to sell the flat and pool the money with each other, at the point when you are put on the deeds.
I should say I don’t have 30k in cash only the equity in my house so would need to sell if I needed to release the funds. Really my preference would be to buy together as this is what we set out to do and had started to look at properties, so this has thrown both of us a bit! We are considering taking out a small mortgage that we both pay into, giving me a chance to keep building equity. The money is not a direct inheritance and it won’t be sent to DP until it’s time to put down the deposit.
Re maternity leave - we have discussed this, I am more reluctant to give up working and he would be happy to work reduced hours and do childcare, as we both earn similar amounts. I don’t see myself giving up my income and becoming totally reliant on him.
I honestly think you should seek legal and financial advice.
Taking out a mortgage seems daft to me. Why have the stress of what is essentially a secured loan on your house as we enter the biggest recession ever in history. Who knows what is going to happen with house prices or the job market.
Unlikely to happen but what happens if you end up in negative equity and loss jobs. If you can I'd avoid having a mortgage.
Also depending on where you are in the country a £500 - 600k house could be massive and massive amounts of work to keep it clean.
He buys the house outright in his name, you keep your flat and get a ore nip so you both leave with what you put it. He’d be very unwise not to protect that sort of inheritance.
Well he clearly doesn't consider you equal in this if he isn't considering putting your name on the deeds and having it 50/50. Think long and hard about this OP and if you do stay get married ASAP
We are engaged, so hopefully it will turn into a marriage!!
Hopefully? . Have you no date set?
If I were you - engaged and planning a ife together - I would expect to be put on the deeds regardless of it being "his inheritance". Either you're becoming a family together or you're not! DP and I are a team, a partnership, and that's what everyone should expect from their relationship surely? Of course its a lot of money but you're in it together, you're a team.
I would expect to be on the deeds, and rent out my fat managed for a minor profit/to keep the asset.
@katewitch so you would expect DP to put me on the deeds of his house but then let me keep my own asset? I think we are trying to reach a situation where we are both somewhat protected financially and that allows me to keep building savings/an asset.
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