Mortgage or not and what does it mean for our relationship?

[ThePartyArtist]

DH and I are planning to buy our first house. We're very lucky and have enough in my savings to buy outright. However we can't decide if it's better to do that or get a small mortgage. Our options are;

Option 1) Buy property outright, 100% will be from my savings.

Pros of option 1 as far as I can see are that we don't have a mortgage - amazingly lucky I know and we really do realise we're very fortunate.

Cons as far as I can see are that if we split DH would be entitled to none of it (except if it had increased in value due to renovations for example). Also would it feel imbalanced as he'd feel he'd brought nothing to the table? Also we both feel that living cost-free due to being lucky enough to have inherited this money isn't quite right. We have considered we could put away each month what we'd otherwise pay in mortgage, and that'd be a fund for house renovations if needed. We'd pay into that 50:50.

Option 2) Buy property with a large deposit from my savings (e.g. 90%) and ring fence that. Get a mortgage for a small proportion, which we pay off equally - this would be a small amount each month, easily affordable to us. In event of us splitting (touch wood won't happen), the deposit I put in would be ring fenced and go back to me, and the proportion that's mortgaged would be split 50:50.

Pros of option 2 as far as I can see are it feels a bit more equal - as we'd both be putting in. It's also more within our principles to pay something for our living costs as opposed to living cost-free.

Cons of this approach are; is it silly, given that we could afford the house outright? The money we didn't spend would stay in savings and hopefully the interest gained would outweigh the mortgage fees. But even so, is it silly to pay when you don't need to borrow the money?

you would be giving money to the bank to feel more equal, and to not live cost free?

If it's bought whilst married it's an "asset of the marriage" so doesn't really matter who put the money in, it will be shared equally regardless on divorce. Whether the split is 50/50 or 70/30 (depending on residency of any children, etc) it will be divided up anyway.

It's not just silly to borrow money you don't need, it's ridiculous. You do realise that banks charge interest to lend you money, yes? So you'll be paying interest on a loan for no reason whatsoever.

You should buy the house outright and then put your income into a savings account. You should probably get financial advice actually about the best way of managing it. You could also set up a regular donation to charity since you could afford it and seem to feel guilty about your inheritance and financial position.

And maybe work on those feelings of guilt - do you somehow few that you don't deserve the money and shouldn't be allowed to live mortgage free?

feel not few

I have no idea how a deposit is ring fenced when married, I do think assets are just split, its the risk you take when you marry someone less well off. Though I see you are already married.

Interest rates are pitiful at the moment and buying outright makes far more financial sense.

Did you receive the inheritance before or after you got married? If it was before, did you get a prenup? I'm guessing you wouldn't have, since they're not common in the UK.

Thanks all, really appreciate the input.

@Singingtunelessly and @Russellgroupserf - I believe it is possible to ring fence a deposit and actually advised if one of you is bringing more to the table. So in our case, if we split, the bit I put in would go back to me, and the remainder would be split as a joint asset as that's the bit we'd have contributed to equally.

I can see it does sound like a bit of a ridiculous dilemma to have and we are really extremely lucky - as you may have picked up I don't feel I earned this money and it goes against my values to live for free when someone else has effectively footed the bill. I am also concerned that we both feel this house is shared, rather than my husband feeling he's the tenant or something! So if we did go ahead and buy outright, what would be the best way to make us (him?) feel it's 'our' house - should we put what we'd have paid for a mortgage into joint savings which are just for house maintenance not generally living / luxuries? Or what?

If you're in the UK then sorry to break it to you but regardless of who stumps up the money, the property will be considered a marital asset and he will be entitled to a share.

I don't understand why you would marry someone and then treat your finances as separate, what happened to "everything I have I share with you"?

@BooAvenue - I didn't know this to be true, are you sure? This may change everything!
Yes I absolutely agree about the partnership thing, but then again when you're talking huge sums of money it's worth protecting yourself should the worst happen. DH is comfortable with this too.

Why don't you buy another house together, too and let it out? That could be his house - he can use the rental money to pay the mortgage and any bills and you can use your spare money for any repairs to your house. That way he is protected, too, if you split up, as he will have his own home.

How big is the house? Is it everything you need for the future? If not how about getting a more expensive one with a mortgage, or one that doesn't need renovations?

In Scotland I believe the money would be considered yours, I believe your assets before your marriage stay yours, they are not shared.

I bought outright and then got diagnosed with cancer and was made redundant a few months later. Thankfully I had enough in savings to tide me over as the utility bills were not much, but if I had gone the mortgage route I would have been screwed and lost the house.

You don't know what is round the corner. Take the security while you can.

Mine was 50% inheritance and 50% my savings. The person who 'gave' me the money would have been delighted to see me sorted in this way and would have been glad I'd used it in such a sensible way. Living mortgage free is a great privelege at my age and gives me options to do things I would never have been able to afford to do normally. I had always been a grafter and was saving like mental for years for a good deposit, often going without to achieve my goal. I feel no guilt about it, but am very thankful to them every day.

If you are concerned about 'equality'. Can DH not pay a set amount into a savings account monthly that you can offset against your money a few years down the line, but still use to benefit you both. I'm sure if you were 50/50, you would not hesitate to buy outright. Look at it as his 50 being on layaway for a while.

In England I am 100% sure that the house will considered an asset of marriage and it won't be considered solely yours if you divorce. I believe different rules apply in Scotland.

If you're married and live in England, your money and possessions are seen as joint in the eyes of the law, so it would be a bit silly to treat them separately. If you wanted to protect any inheritance/savings you had before getting married, in case of a future split, you would have had to get a prenup.

You would need to check this with a solicitor, but I think you could put both names on the property deeds even if the money to purchase the property is coming from you alone. In fact I don't think it really matters which bank account the money is coming from! Getting a mortgage would complicate things and it would make you less attractive as a buyer (buying outright makes you a cash buyer, which many sellers prefer).

How recently did you get the inheritance? Have you had independent financial advice? I strongly recommend it. DH and I saw an IFA after coming into some money (nowhere near enough to buy a house without a mortgage, I hasten to add!) and it was very helpful.

TheParty, ring fencing money after you are married is nigh on impossible. Unless we're talking off shore accounts/complicated arrangements with accountants, etc., which could be challenged in court unless your DH decided not to do that. Anything bought after marriage is a joint pot to be divided according to needs upon divorce.

Why don't you put down 50% then he's pays the mortgage for the other 50%?? Both split day to day bills..