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AIBU to be unsure about this? (First time buyer problems!)

(54 Posts)

My DP and I have been together for 6 years, and have been talking about buying a property for the last couple of years. We are in our mid-twenties and both work in London, so this is where we would be looking to buy.

DP earns £30k a year. His job involves a lot of travel; he has been in the UK for about 3 weeks out of the last 5 months. Once he gets back from his current trip, he will be around quite a bit more, but will still travel often. I have just been offered a 12 month contract at £22k. I know that getting a joint mortgage will probably be difficult, as I don't have a permanent job yet.

He is saying that he will try and get a mortgage on his earnings, but I don't know if that will be possible. If we buy a flat it will probably be fine, but we were hoping to buy a house, make improvements while we are living there and move on in 5 years or so when we will probably be getting married and starting a family. In London, we are unlikely to get a mortgage for a house on £30k!

Also, it means I will be in effect just paying him rent and wont have any stake in the property. He doesn't seem to understand why I might be bothered about this, he says if we split we would split the proceeds 50/50. I want more assurance than this, I think we should do it properly.

He has saved about £15k. My parents have offered us £20k as a deposit, to be repaid to them on the sale of the property (plus a percentage of any extra profit). They are hoping to raise a bit more money for their retirement. I haven't managed to save anything- I am still paying back my MA and have struggled to find long-term work after uni.

I have said to DP that my parents wont give the 20% if my name isn't on the mortgage. AIBU? I think it would be better to rent for a while longer, until we can get a mortgage on equal terms. He doesn't see it like this- he seems to think as soon as he gets back from his work trip we will find a house to buy and move in hmm. He does have the tendency to bury his head in the sand a bit.

I need to move out of my parents' house by mid-April. My sister will be home from travelling and there is not enough room here! I want the independence of living with DP again, and to cut down the commute.

Hope you can help me sort my thoughts out a bit- I can't discuss this properly with DP until he gets back next weekend. He is in India and the electricity keeps cutting out so Skype is challenging to say the least wink

Oops sorry parents are giving £20k not 20%, brain not working today

DarlingGrace Fri 21-Feb-14 13:08:02

your name has to be on the deeds, not the mortgage for you to havea financial stake in the house

That shows how ignorant I am about this! Thanks DarlingGrace

shewhowines Fri 21-Feb-14 13:09:03

If you are putting in 20K then definitely make sure your name is on it.

It's done on affordability. I would have though you'd be able to borrow more as a couple, even if it is only a temporary contract. Don't quote me on this, though.

indieakka Fri 21-Feb-14 13:14:33

You need to protect yourself, you're right on that. A solicitor can draw up a Cohabitation Agreement which will address all your concerns re ownership, rights, etc. My experience was that they tend to be generic but that you can 'personalise' them to fit your situation.

Bearbehind Fri 21-Feb-14 13:17:29

If you go on the mortgage, unless you can find a lender which will accept your new and temporary role, you will reduce your partners borrowing ability as you will be classed as dependent.

Having said that, the source of the bulk of the deposit being from your parents is likely to mean you have to go on the mortgage as they won't accept that you would have no interest in the property.

It's a double edged sword, renting in London will mean you can't save much more in the next few years so unless you get substantial salary increases, you'll be in the same position in a few years, with the prospect if having children and thus increasing costs/ decreasing income being closer.

If you are struggling to find work and your partner isn't in the country much, have you considered leaving London?

You salaries aren't ever going to go far there but they would elsewhere.

Bearbehind Fri 21-Feb-14 13:18:04

If your name is on the deeds, it has to be on the mortgage.

Forester Fri 21-Feb-14 13:20:27

Yes there's a difference between who owns the property and the mortgage. It's common that both ownership and the mortgage are shared but any arrangements can be put in place. Though you should both be having separate legal advice.

I know that it's not the question but I would be hesitant about taking on a property that needs a lot of work if you DP is out of the country so much as it will all fall on you.

HelpfulChap Fri 21-Feb-14 13:21:31

As aleady said, 100% make sure your name in on the mortgage.

Also it might be worth having a proviso/caveat drawn up regarding the �20k your parents are lending you. You might have to treat it has a gift to you personally & not as an investment as this may cause problems with your mortgage providor.

Longtalljosie Fri 21-Feb-14 13:22:09

Put your name on both. Mortgage companies are used to dealing with people on one year contracts. It may be you won't be offered the amount you'd be offered if your £22k was a permanent job but it will be factored in. Is your DP pushing to have the house just in his name? Because if so I'd be questioning the whole relationship to be honest!

Roshbegosh Fri 21-Feb-14 13:24:35

If you will be paying half of the repayments then both of you need to be named as owners regardless of who's salary was used to calculate the mortgage allowed. A joint application will be necessary anyway on your incomes. Whatever you do make sure you get independent legal advice. Or get married, then half is yours regardless.

ShadowFall Fri 21-Feb-14 13:25:30

Well, if I was buying a house with someone - so putting my / my parents savings down as a deposit, and expected to pay my share of the mortgage and bills, then I would definitely want my name on the deeds of the house.

It's all very well him saying now that you'd split the proceeds 50:50 if you split, but if your name isn't on the deeds there'll be nothing holding him to that, so if things were to turn nasty, he could easily turn around and claim that he never made any such promise. I don't know if it's possible to legally contest that on the basis that you'd put in �20K, but even if it is, it would certainly have the potential to get very messy and expensive.

And also - I appreciate this is very much a worst case scenario - but it looks from your OP that you're not married. If this is the case, and the house is only in your DP's name, then if he were to die without a will leaving the house to you, then my understanding is that you would have no automatic claim to the house & any equity in it. It would go to whoever his next of kin is.

Pigsmummy Fri 21-Feb-14 13:27:30

You can't have your name on the deeds of you are not on the mortgage. In fact a mortgage lender will make you sign a declaration saying that you have no claim on the house if they know that you are going to live there without being on the mortgage.

You can either get a joint mortgage and no hassles or get him to buy a house and get a seperate legal document drawn up confirming how much you each put in.

However....look at a mortgage calculator online, you are likely to be able to a mortgage of 100K - £190. In London? That's not going to be viable is it? If you are desperate to buy how about a buy to let outside the area?

Why the panic to buy now when your financial situation isn't great? Why not pay off your MA and try to get your earnings up?

AnywhereOverTheRainbow Fri 21-Feb-14 13:32:10

If you have at least 15% of deposit your husband can borrow until 70,000.
With 10% deposit and me being a dependant the amount of money we could borrow was barely 50k. With me on the mortgage as a student/unemployed person the amount he could borrow was even halved, 25,000 £.

My advice would be that your parents borrow your money to him and you put that in legal writing. Your name can't be on the house contract just because of the deposit, given that the deposit wouldn't cover the 50% of the value of the house, right?

The best solution is: tell your parents they borrow that money to your husband and he has to give it back to them (my husband will do the same with his parents).
You don't pay any rent to him but you put that money away for the future, in a savings account. Once you have a permanent job, you can renegotiate the mortage or even better, sell the house/flat and buy a new one at 50/50 house and mortgage. That is what me and my husband will do once I get a job (after I graduate, so a long time....).

AnywhereOverTheRainbow Fri 21-Feb-14 13:34:38

Forgot to say that I doubt you can buy a house in London with what you earn and what your hubby saved until now.

I agree with pigsmummy, better you buy later on than going through the hassle of a mortgage/house now.

Thank you everyone, you've helped me sort this out in my head a little! So whatever happens, I won't go into this without at least having my name on the deeds. If we were married this would be a lot simpler but I don't think we will be getting married for a few more years. We have both said 'before 30' but no more than that really.

I know this sounds really naive LongTallJosie but I don't think he's doing this on purpose to be a bastard, he just doesn't seem to be thinking it through clearly. Have come across this before with him... it doesn't help that we can't be in the same room together to have the conversation at the moment as he is 7000 miles away!

We can't leave London at the moment- DP has been very successful at his job. He started on £24k in January 2013, has had two pay rises since then and has been told that as long as he does well in his new role at the company, then his next step is management and more money. The experience he has gained is too good to walk away from at the moment- when he does move on to a new role, his CV will look pretty amazing.

When we start a family I appreciate we will probably have to move out of London, but that isn't going to be for a few years yet.

Bearbehind Fri 21-Feb-14 13:37:02

Not being funny anywhere but there are a lot of flaws with you plan.

Do you really think they could live in London on just his £30k salary as you are suggesting she saves her 'rent'?

Also, if there are conditions on the source of the deposit, ie it is loaned from her parents, it will affect the mortgage as is will be classed as a loan not a gift.

AnywhereOverTheRainbow Fri 21-Feb-14 13:38:22

Oops what a messy poster I am! confused

I thought you were married! Well no, I would postpone everything.

Believe me that we are going through hell anyway with all the legal details and I am married!

I would continue to rent, sorry.

My MA is almost paid now PigsMummy I had a small windfall which enables me to pay the balance. Although I want to buy, DP is more fixed on this than I am.

I think this is partly our different upbringings, my parents do not own their own home after losing everything in the recession in the early 1990's. His parents own their home and have several buy to let properties. I think he sees owning your own home as a measure of success in life- I think it would be great but we are still only very young. I do appreciate his point that rent money is dead money though

AnywhereOverTheRainbow Fri 21-Feb-14 13:42:14

Bearbehind

Well first point I corrected myself (yes I never lived in London and thank God I never will! Yes 30k are peanuts there).

Second point, it is not classed as a loan if the transfer is made through the banks and in a lump sum.
But it had to be put in writing between the parts. I can tell you for sure, we are going through the process atm and it was not considered as a loan. It will go through the money laundering laws though.

perplexedpirate Fri 21-Feb-14 13:43:18

DO NOT TRUST ANYONE WHO DOESN'T WANT YOUR NAME ON THE MORTGAGE!!!
Please, learn from my experience. If I hadn't insisted at the time, despite all his 'but i'd never see you go without' claptrap, I'd have been out on my ear with nothing but the clothes on my back.
DON'T DO IT!

razmataz Fri 21-Feb-14 13:44:42

If you are looking to buy in London, you will need both your incomes for affordability. I don't think you'd even get a studio flat on what he could afford with 30k.

Even with a contract for a year you could potentially get a mortgage, but would need to show evidence of consistent earnings over the last 2/3 years - this is what my partner and I had to do as he works contract jobs too. Could you do that?

If you do look to buy, I think you will need to manage your expectations as to what you can afford. The property market in London is in a complete frenzy at the moment and even on your joint incomes I think you would struggle to get a house.

And if you did get something needing work, would you have enough money to cover the costs of the work, which can run into thousands quite easily.

In your situation I would use one of the mortgage calculators online to have a look at what you could borrow on either a single or joint income, and what your likely repayments would be - see what you can afford to repay, and then have a look on RightMove and see what is actually out there for your money (bearing in mind that many properties in London are going for well above asking price at the moment.) If that all adds up then go and see the bank and have a conversation about whether they'd consider you for a mortgage in your position.

But otherwise I would hang fire until you have a more permanent job with a better income, and rent until then.

DarlingGrace Fri 21-Feb-14 13:45:41

If your name is on the deeds, it has to be on the mortgage

no it doesnt!

AnywhereOverTheRainbow Fri 21-Feb-14 13:46:40

Dilapidated

If he wants to buy a house to make an investment, well I would let him do it and you pay the rent to him then. Also leave your parents out of everything, I guess if you are not married and not part of anything else at the moment it is just better. As you said, you are young and you have time to make such a difficult choice later smile

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