Buying property with DP - uneven deposits, advice needed

[Catseyes5]

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.

[JoJoSM2]

If you’re actually getting married soon, then it will be all shared anyway. Presumably you’ll run your household together and the house will be your ‘family home’ and not ‘his house’.

I agree that having a btl is a hassle but you can always use the income to pay into your pension as that’s tax efficient. Alternatively, just sell the flat to invest the money elsewhere.

[HollowTalk]

You say he's paid towards the bills while living in your flat. Do you mean you've paid all the mortgage and he's lived rent-free? Is that how he's saved £80K while he only earns £40K? When you were trying to cope with paying for the mortgage, did he help out at all financially?

[SwedishEdith]

How long has he lived with you and has that enabled him being able to save £80k (a lot, especially if he's earning approx £40k)?

[lunar1]

Buy together and take a mortgage for the % you can realistically own. He can keep his remaining money in savings.

[Blackbear19]

Ok I might have mixed up with him having £80k to deposit saved.
Either way clearly her flat isn't going to be the same size as his £500k house.

Very often when a couple split the woman still ends up with the lions share of the child care and costs. Could she still afford the mortgage on her flat and childcare while he Lords it up in the Manor?

I'm thinking that Katewitch is right they should be equal in the house.

[BuffaloCauliflower]

If you’re getting married why not just pool everything? Isn’t the point of marriage to be a team, instead of going in working out how to keep things seperate. Whatever happened to ‘what’s mine is yours?’

[HollowTalk]

Where does the OP say her flat is worth £80K?

[Blackbear19]

Katewitch does have a point.
Its fairly easy to divide things yours and mine while you are just two individuals / married couple. The you fall pregnant life gets complicated.

If you were to separate in 5 years time with a couple of kids under your arm surely they should have the same quality of life with both parents. Not having time split between a £500k big house and a cramped £80k 2 bedroom flat.

It's a complicated situation as I do get the desire to protect his assets. But at the same time you are planning on entering a marriage. It might actually be better to be legally married before he buys but you need advice on that.

[fuckingcovid]

I'd say keep part of the original plan and protect your own interests by ringfencing each others share.
Sell your flat and that is your share. He puts in his original £80K plus £300K (ish) which is also protected. Take out a small mortgage so that you are named and can have a share in any built up equity. He would still have a large lump sum for emergencies, holidays, investment etc.

I'd see a mortgage broker as it's complicated, and there is the legal aspect when you marry.

[katewitch]

I would initially try to look into remortgaging the flat as a BTL with both if you on the deeds, once you've cash bought the house you're living in together. Might that work?

[Catseyes5]

@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.

[katewitch]

*flat!

[katewitch]

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.

[Shmithecat2]

@Catseyes5

We are engaged, so hopefully it will turn into a marriage!!

Hopefully? . Have you no date set?

[missbipolar]

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

[IceCreamAndCandyfloss]

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.

[Blackbear19]

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.

[Catseyes5]

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.

[Catseyes5]

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.

[Horsemad]

Get some legal advice!

[Skyliner001]

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.

[GreyishDays]

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.

[dottydally]

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.

[mdh2020]

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.

[CaffeineInfusion]

My choice...

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.