Not to contribute to mortgage?

[StopItAndTidyUpNow]

My sister has been with her boyfriend for about 4 years, they live separately, he has one DC from a previous marriage..

They want to buy their own place together but in order to do that she is going to sell hers, move in with him into his house and then once a suitable house comes on the market they will only have one house to sell rather than 2.
They agreed to sell hers because his DC is settled in the house and it wouldn't be fair to move him once to hers, then again to another place, plus his DC can walk to school from where he lives now and can't from my sisters place.

Anyway, we were talking about it on the weekend and she plans to move in but not to contribute to the mortgage by paying rent, the reason being is that all her disposable income will go straight into savings and be used to put into the new house. She doesn't want to contribute to the mortgage because she won't be named on it so if anything were to happen to her DP she would need to leave and ultimately she has reduced someone else's debt with no benefit to her. Similarly if they were to split up she will have reduced her DP's mortgage debt and be entitled to nothing.

Her and her DP have spoken about this and whilst he agrees that this is the most sensible thing to do he keeps giving her the occasional dig, i don't think hes serious, but a lot of serious things are said in jest! saying things like "well you could swan off after a year of free rent with your savings" - obviously she wouldn't do this, unless the relationship broke down but she's concerned that it will start to become an issue the longer she is there.

She has asked me if its the right thing to do and I am biased because she's my sister and because this happened to me - I moved in with an ex, paid rent which reduced his mortgage so that when we bought our next house we would have had more of a deposit, but the relationship broke down and he ended up with approximately 20k reduced off his mortgage just from my contribution and I walked away with nothing.

So has anyone been in this situation? What did you do?

Why can't they both stay living separately until they make more of a commitment to each other. I would never give up my security like that for a man I wasn't going to marry.

I don't think she should contribute to his mortgage! Food and bills yes but the house will be HIS contribution to the joint home so he should be paying into it himself. No one wants to charge a partner money to live with them - surely..? Something is rotten if they do.

If they can't figure this out, I doubt they're ready to buy together

If he truly loves her, why is her questioning this? Once sale is through, she’s put her financial life on the line for him. When they buy somewhere new, presumably jointly financed, she can put in what she saved into house. He sounds a bit ummm

I would never expect, or feel comfortable, living somewhere within contributing to the cost of living there. Be it rent or mortgage.

If I were in her position I would pay him rent to live there and he could choose what to do - save, keep the money or overpay mortgage. I would not feel comfortable living in someone else’s house free, it’s assuming and cheeky I think.

I would feel a bit resentful of somebody moving into my home but not paying anything to live there while I was working hard to pay my mortgage every month.

Without, not within!

I'm sure everyone would be delighted with a man living rent free in a woman's home with the promise that the money he saved would go in to buying a house together some time in the future.

Isn't that a description of the much despised cocklodger? Or is it only men who are untrustworthy scroungers...

Difficult one thanks for all your answers!

I did this with my dp although only for 6 months. I sold my house and moved into my dps while we looked for our current house. He was comfortable that as he was paying the same mortgage if I was there or not then I then put what I would have paid for my mortgage into savings and then i used that to buy items for the new house. He got the benefit when he sold his house as he got back a fair bit in equity not all of which went into new house as we'd agreed we would both pay 50% of agreed amount of deposit for new house so he had some left over which are now his own savings
To me this seems the most sensible, and is the plan she had in her head except as far as i know they both plan on putting whatever they can into the new house, and not necessarily equal amounts. She will probably end up putting more money into the new house as her equity is bigger and she will also have the savings from not paying a mortgage to go into the new house.

I was thinking about showing her this thread but i think the comments of her being a CF would upset her as that's truly not her intention, but as other's have mentioned she is essentially giving up her home, she will have estate agency fees to pay (few grand), then the solicitors, moving vans, storage.. there are some things she doesn't want to sell but won't fit in her DP's house so they will need to go into storage until they buy the bigger place. He has none of these costs as nothing has changed for him.

I think if she had a crystal ball and knew that either nothing would happen to her DP or they would end up happily ever after then she would 100% pay half of the mortgage to reduce the equity but it's the not knowing that worries her.

In our situation I paid estate agent fees solicitors etc when I sold mine. DP paid them when his sold. Only fees we split were new house fees. Deposit was based on what I could put in as I didn't have as much equity as him. It worked for the short time we were doing it but if it had gone on longer I don't know if we would have had to agree something else. The money I had from my house sale was safe though ie in my own savings account so in the event he (Or i) had done a runner then I'd still have a deposit for an (albeit smaller) house.

I would feel a bit resentful of somebody moving into my home but not paying anything to live there while I was working hard to pay my mortgage every month

But it should only be for a couple of months whilst they decide where to live and get his house sold.

I think if they are going to pool their money to buy a house I think she should pay down his mortgage with whatever profit she has from the sale of her house and he puts her name on the mortgage and deeds and she then goes half in everything.

That way she is protected and he gets his mortgage paid.

If there is a problem doing this then I think it will be a true test of their relationship.

I am looking at both parties.

Can she not have the mortgage put in joint names, I know that you have to pay to do this but it would make her position secure and she would be able to feel that she could contribute to a mortgage that she was named on. If the relationship broke down she would not be left high and dry and homeless. I would never move in to a shared home with a partner unless my name was also on the mortgage.

she is essentially giving up her home, she will have estate agency fees to pay (few grand), then the solicitors, moving vans, storage.

She doesn't have to do that, though. She is choosing to sell her house because it suits her. Moving costs would presumably be split?

I can't imagine living anywhere rent-free as an adult. Would not sit well with me at all.

Would a comprise be to contribute to the interest only portion of the mortgage rather than repayment? That way she would be contributing to living costs but not building up his equity.

There are three ultimate long-term possibilities.

Scenario 1 is that the relationship and moving plans all work out perfectly. Once married, the couple share all assets as equal and live together harmoniously for the rest of their days.

Scenario 2 is that none of this works out, and after some indeterminate period of living in dp's current home they split up and never buy a home together.

Scenario 3 is that it seems to work out at first, they do buy together, but then split at some later date and need to determine how to split the assets.

What is needed is a plan that is fair to both parties in all 3 scenarios.

I think that she should put the amount she would have been paying in rent, less any expenses that are directly attributable to this plan (eg storage expenses) into a separate savings account. Whether that is a joint or solo account is not hugely important but the two of them should agree in advance what happens to the money.

In scenario 1 & 3 this additional savings pot is contributed towards the buying of the new house together, increasing their buying capacity so they both benefit from it. The only issue is determining how much of the equity belongs to each person in the event of scenario 3 - for which the same logic as for scenario 2 can be applied.

In scenario 2 the fair outcome is that she should be returned to the situation she would have been in if all this had never happened, and then any further benefit is split equally. So if this happens she should be able to buy a place of similar size, location and quality to the one she has sold. With a mortgage debt of the same magnitude as it would have been if she had stayed put all along. The cost of returning her to this situation is a complete unknown as house prices could spiral up massively, crash terribly or stagnate. It should be agreed that the first use of the earmarked pot of money is to return her to this original state. If circumstances are such that she wants to move to a home that is significantly different in size, quality or location then the price of a theoretical property similar to that which she sold should be used for calculations rather than the actual cost of what she buys. After having resolved that, any remaining amount in the earmarked savings should be split equally between them so that they both benefit equally.

The point I am making is that she will not be living "rent free" in this intervening time, just because she pays him no rent. She is incurring real cost - every time the cost of buying back her old house goes up by £5k due to market forces she has effectively lost £5k.

If the plans work out and they seem on track for scenario 1 - they should do the theoretical calculations for scenario 2 on the day that they buy the new place, and keep a note of those figures so that in the event of scenario 3 they have an agreed clear idea of what each of them originally contributed for the purposes of splitting equity.

Stick her half of what would be rent/ mortgage in a joint account. Problem solved

she is essentially giving up her home, she will have estate agency fees to pay (few grand), then the solicitors, moving vans, storage.. there are some things she doesn't want to sell but won't fit in her DP's house so they will need to go into storage until they buy the bigger place. He has none of these costs as nothing has changed for him.

I would agree with this if it wasn't part of a joint plan for them to live together. Your sister isn't giving up her home, she and her DP agreed together that they'd prefer to sell one house at a time and then get somewhere together, it's not like he's demanded that she give up her home and live in his. He will face the same costs too when it comes to selling his house .

I just don't agree with the thought process that she's somehow disadvantaged here. Of course if they split up she will be a little worse off, but they're not planning to split up, they're planning to buy a house together, so this is only a temporary arrangement, and suits both parties.

I don't think your sister is taking advantage, but I do think in her DP's shoes I'd expect a token contribution to reflect the fact that he's paying the entire mortgage for what will be her home (even if only temporary). It's likely to be well over a year that she's living there. I don't think she needs to pay half the mortgage at all, but a contribution (on top of bills) towards the cost of living in the house would probably be welcome and would likely make both sides feel more equal.

stick her half of what would be rent/ mortgage in a joint account. Problem solved

Until he clears the account and kicks her out.

I just don't agree with the thought process that she's somehow disadvantaged here. Of course if they split up she will be a little worse off, but they're not planning to split up, they're planning to buy a house together, so this is only a temporary arrangement, and suits both parties.

It's more than a little worse off. And her partner is the one "joking" that she could swan off after a year of living rent free, but in that situation she is far more likely to be worse off.

If people want to treat this like a commercial transaction then they need to take account of the risk. In any business deal, risk is a significant component of the transaction. And if you want someone to take on a risk, you pay for it. (But in this case, he's not even paying for it as his costs are pretty much unaffected - if anything he'll be gaining a bit by sharing of bills.)

Oliversmumsarmy.... That wouldn't work. What if he has already paid say 65% off his mortgage already and then gf pays 15% off say, and then puts her on the deeds, and thrn they split up. The bloke will lose out, he'll have to give her half of the sale. Stupid idea.
All they need to do is go halves on the bills and after paying storage costs, they put the remainder of what she would pay on rent or mortgage into a joint savings account. That way if they do split up, he'll get half of what she saved and so will she.

Oliversarmy- you can have the account so that both need to sign for any withdrawals

If you can prove you contributed to the mortgage payments you can claim that back and it doesn’t mean you walk away with nothing.
She may be better renting it out until they are both ready to get a house. She may make a bit more money that way

but a lot of serious things are said in jest! saying things like "well you could swan off after a year of free rent with your savings

If they are all set to move
She has already sold her house and it is now his turn to put his house up for sale and start looking at a new home for them all.

My worry is he isn't going anywhere. He is already thinking they will still be in his house for another year.

That for me would be a red flag for this plan.

Icanttakemuchmore they are supposedly going 50/50/on a new house so going 50/50 now shocks be a problem if they are a secure couple who are looking at a long term relationship

shocks=shouldnt

I'm with @trojanpony AND there are lots of possibilities in the future, including what if OP gets pregnant, isn't married and the relationship breaks down, good luck getting another mortgage as a single parent!!

OP's DP isn't being disadvantaged paying HIS mortgage himself. He is putting HIS cash into HIS investment/home.

Can’t she get added to his mortgage and use her money from the sale of her house to pay of his mortgage (‘their’ house at this point) then they should both have spare income to put into savings and everyone is protected until they buy their dream house?