Is this a fair way to split costs (mortgage related)?

[babycatcher411]

Person A and Person B want to move in together, but are considering the long and short term implications of doing so.

Person A (who has a child) owns a house, whilst Person B had been intending buying a house (has a deposit). The equity and savings are about equal (this may be relevant later? Not sure)

They have never lived together before so buying together at this point doesn’t seem sensible.

B initially states they are happy to pay half all the bills inc the mortgage.
B makes a comment in a different conversation stating legally (they believe/have been told) that after 3 years living together they would have entitlement over (some of) the property if they’ve paid in, regardless of it being in A’s name.

However A doesn’t think it is fair to B to pay half, as the mortgage is in their name and B would be essentially helping paying off their mortgage for them.
Equally they are concerned should the relationship breakdown that it would give B some entitlement over the house, they do not want this at this early stage of the relationship given they have a child.

A feels however that paying nothing would be unfair as B would be living rent free.

A suggests that B pays just half the interest, thus is paying a ‘cost’ of living in the house but isn’t paying off the equity. So A benefits no more from this than they do sharing the bills which are also a cost of living in the house. But B should also save an equal amount as to the balance of the mortgage that A is paying (hope this makes sense).

So let’s say the mortgage is £400, £100 is interest £300 is against the equity.
A would pay £350
B would pay £50 to the mortgage and save £300, totalling £350 also.

The theory being if they split up, neither is worse of, A has the equity in the house, B has their savings. But that if they live happily ever after together, as is hoped, when it comes to buying a house together, they can both contribute an equal amount towards to joint house.

Does this seem logical? And/or fair? And legally would this protect A’s house/equity should they sadly split up?
A does not want to screw over B, but also wants to protect the interest of their child and their home.

Sorry that was so long, trying to make sure I’ve made it entirely make sense and not drip feed anything

Don't move in together.

Why so? They’re just trying consider the most sensible and fair way of moving forward.
Which I have to say does sound very cold when written down the way I’ve put it, but when explained to me, seemed logical to me, but I have no legal knowledge/experience in this situation.

This is what I did. I was saving for a flat and DP already had one. I paid half the bills and the interest on the mortgage whilst still saving. I had no desire for either having him lose his home should we split or in paying off his mortgage.

The caveat being this delayed my getting on the property ladder but I still had some great interest on the savings and a deposit ready to go if the worst happened.

I did consider buying a place to rent out but decided against it as we did plan to buy together in 1-2 years.

Fast forward and we are now buying a place together which will be 50/50. Worked for us. Neither of us had children when we met though so not sure if that would change things.

I'm not sure of the legalities, but could A treat B as a tenant and charge rent at a set market rate? If B were to rent anywhere else they would be paying rent at market rates.
If B isn't paying market rent he's effectively benefiting from A's situation.

What A spends the rent income on is entirely up to them.

if down the track they wanted to buy together they could put in equal amounts at that point.

Before we married my husband bought a flat in just his name. He paid the mortgage and I paid for other bill that I would have been paying for regardless of where I lived. We worked it so the bills I paid were roughly the same amount as the mortgage, and any other bills that needed paying we split in half so we were contributing the same amount into the household

Is living together for a year then buying something 50:50 an option? Then it's only a relatively short term arrangement before equal finances

Sounds ok, but not sure why the split is 50:50. Their is 3 people involved so B should only pay 1/3 the mortgage interest + 1/3 the bills.

Plus setting a deadline of 1-2 years to decide if its working would be good. After that they should agree something more permanent.

See a solicitor , they will draw up a document I think called consideration that details exactly how much equity you put into purchase and that you will have rights to have this reimbursed proceeds of sale - I did this when I got married as I had a large chunk of equity. We share the mortgage 50/50 but it is in my name

Christ. So complicated. Do any of you actually want to move in together?? It is cold - you’re right.

@singme

I did consider buying a place to rent out but decided against it as we did plan to buy together in 1-2 years

Yes this is one thing that has been consider and written off as not sensible as ideally they like to buy together within maybe 1-3 years so probably wouldn’t be cost effective.

@BouquetOfRoses

Is living together for a year then buying something 50:50 an option?

Ideally that’s the plan, assuming the right house comes you in that time, they’re just trying to consider the long term impact if they don’t end up buying something as quickly as intended.

This is complicated, cold and a recipe for disaster. There are many other factors at play... childcare, chores, size of salaries , use of utilities, salaries and ability to pay for proportionate usage .
Maybe don’t live together.
Oh, and entitlement to property , in your case, would need a very clear paper trail and a solicitor.

A should be paying two thirds as there are two of them and one of B. B should save what they would pay in rent and add it to the house deposit fund for when they buy together. If it doesn’t work out, neither have lost anything as A would have saved on bills and had the mortgage anyway and B can move out with the savings.

Seems sensible, so long as B does save.

I don’t think costs should be split 2/3 to A and 1/3 to B. The child will not add to costs hugely and I imagine A will cover any direct child costs.

Will A lose any benefits by B moving in? If so, B should recognise this and ensure that A is not worse off by B moving in.

I think was A in this situation. I took not a penny towards the mortgage, we split other bills 50/50.

Before we married my husband bought a flat in just his name. He paid the mortgage and I paid for other bill that I would have been paying for regardless of where I lived. We worked it so the bills I paid were roughly the same amount as the mortgage, and any other bills that needed paying we split in half so we were contributing the same amount into the household

This is not a good arrangement for one of the two people.

The child being 1/3 the cost is a valid consideration and not entirely one that has been considered from the point of view of household costs.

In the short term A intends to continue to pay the child related costs.

Both have near equal incomes, A won’t lose any benefits as a result of B moving in other than council tax discount.

You could have a deed of trust made up for around £100.

This would secure your deposit for the future.

For example:

You buy a place for £220k.

Person A puts a deposit of £50k down with their name on the mortgage.
Person A and person B share house costs equally including any home improvements.
If they decide to go their separate ways, person A still has their £50k and then any new equity is split 50/50 between person A&B.

I'm in the same position as this and am person A.

DP and I pay 50/50, his argument being that he was paying much higher rent elsewhere and that he had no "claim" in his rental property. He's saving a good few hundred pounds living in this house so is happy to pay 50/50.

However, my mortgage is small - £325 a month. Of what DP gives to me for bills, I keep £200 in a savings account.

In your situation described, I'd take the £200 50/50 split, but put £150 into your own savings rather than person B putting it into theirs. That way, if there is a split and person B tries to claim money from the house, A has a pot of money there to pay out. If person A is not legally obliged to pay out, they then have a pot of savings.

Of what DP gives to me for bills, I keep £200 in a savings account

Eh?

@TokenGinger
That sounds like a good and fair alternative, definitely should be a consideration

@ 1Morewineplease

This is complicated, cold and a recipe for disaster. There are many other factors at play...

They are well aware there are many other facts, which are also being considered.

How do you suggest two people, who want the same end goal, however with different financial positions consider moving in together? Do they just go in blindly because they love each other?
Because I see a lot of posts on here berating individuals for blindly leaping to things together without good consideration for the impact of their decision.
And both of these adults are grown up enough to understand that sadly relationships don’t always work out and they want to ensure they are both considering each other’s ongoing outcome fairly

The child being 1/3 the cost is a valid consideration and not entirely one that has been considered from the point of view of household costs.

In the short term A intends to continue to pay the child related costs.

A and B need to discuss the long term. Kids don’t get cheaper. Have they discussed their respective views on punishing children and bedtimes? The time to discover they have wildly different views is not after they’ve committed to moving in

Are they planning joint kids? What will happen when A is on mat leave with regard to her child’s expenses?

What about holidays? What if A gets made redundant and B’s income is taken into account in benefit calculations?

Or just carry on as you are but with B moving in with A and save as much as you can. I don’t really understand the whole moving in together, buying a house together as a couple but x pays 50% y pays 50%

Unless a couple are on the same wage (doubtful) it’s never truly going to be 50:50 and equal. A had a salary of £45k, B salary is £16k. It’s all very well saying £900 per month etc but that means B will have a lot more money left over.... would it not be more fair to pay a percentage of your wage?

What I’m getting at is where do you draw the line of what’s deemed fair. I understand the need to protect assets etc but I think it’s impossible to make it completely perfect fir everyone. Just got to go with what suits best.

Hope you get it sorted x

As there’s no such thing as common law wife etc they wouldn’t be able to take you fir half your house op. The only way that could possibly happen is if you didn’t work and they could prove the mortgage payments went out of their account etc and you were totally reliant on them.

That’s why marriage differs. It’s a legal contact. If someone is daft enough to pay the full mortgage fir done one else else then that’s they’d own fault. They’ll have a job and a half getting it back!

We had one brief conversation after knowing eachother 6 months... "Do you want to move in?" "Yeah, ok.. I'll pay half the mortgage and half the bills". That was 10 years ago, and we're married 5 now

Have A&B considered marriage first? Isn't that the normal way to do things?