How would you divide our finances?

[GalleryGirl]

Not AIBU so much as WWYD...

I always find the finances threads interesting; a common theme tends to be completely shared finances, so I'm interested to see what people suggest for us

DP and I have been together 3 years, not married.
We've recently bought a house together.

The house is split 50/50 - DP paid his half in full, I have a mortgage for my half.

8 years ago, DP's parents gave him an interest free loan for his previous house, and the house increased in value substantially so a combination of savings (no mortgage interest + being frugal) and house value increase left him with enough capital to buy his half of our house outright, plus leave him with about £70k in savings.

I'm employed and also run 2 businesses, one of which employs DP part time.

DP works approx 25 hours a week (admin work, WFH) - he earns £1,000 a month after tax.

I work 60 hours a week in my job, plus another 40-50 hours for the businesses. I don't need to do the job but I enjoy it, though its very physically demanding. I earn £3000 a month from my job, plus £2 - £4k from the businesses. (after tax). I reinvest most of my money into the businesses, and am setting up a third with my current savings.

We split the household chores evenly - though DP does all the dog walks (2 hours a day).

All house renovations are split 50/50.

So in summary:
DP works 25 hours a week, earns £1k a month, has £70k in savings - does not pay mortgage.
I work 100 hours a week, earn £5-7k a month, have £50k in savings - pays mortgage.

How would you divide our living expenses? (water, electricity, council tax, food, holidays, etc etc)

Please be nice, I know finances can sometimes rub people up the wrong way but if it bothers you, please just scroll on

I think 50:50 bills and 50:50 on food and shared luxuries is fair.

@GalleryGirl

I guess the added complication is that he has assets amounting to approx £320k, (£250k in house + £70k savings) whereas my assets are £100k ish (£50k in house, £50k in savings)

What a nightmare having 50k in savings must be for you......

There is absolutely no reason for you not to spilt the bills/food 50/50. You would expect the same if the roles were reversed

He should pick up more of the chores as he has loads of of extra time.

@birdschirping

So deduct mortgage from income for her, then pay bill proportional to that net with his. If one partner has less income then it would be A norm to proportion the bill payments. It is what I did with my DH - I don't understand why it would be different in this case when it's suggested in other threads.

Her income is significantly higher than his, even with the mortgage payments deducted from her income - which makes no sense as its fundamentally the same as what you suggested before. If someone is earning 5k a month plus has 50k in savings there is absolutely no reason why they should be trying to pay anything less than 50% of the overall bills.

I'm intrigued by the mortgage set-up. Have you been able to take out a mortgage in your name only for half the value (less deposit) and how is DP protected from having the house repossessed if you stop paying. The lender can't repossess half a house so has DP effectively signed away his right to security of ownership?

@TheTeenageYears

I'm intrigued by the mortgage set-up. Have you been able to take out a mortgage in your name only for half the value (less deposit) and how is DP protected from having the house repossessed if you stop paying. The lender can't repossess half a house so has DP effectively signed away his right to security of ownership?

Presumably it's a joint mortgage with a large deposit paid by him and the rest paid from her bank. If she stopped paying he has enough to keep doing so

@TheTeenageYears

I'm intrigued by the mortgage set-up. Have you been able to take out a mortgage in your name only for half the value (less deposit) and how is DP protected from having the house repossessed if you stop paying. The lender can't repossess half a house so has DP effectively signed away his right to security of ownership?

You can't take out two mortgages on a single property, DP would have paid his half as a massive deposit. So OP would have benefited from that as well. DP would have no recourse if OP defaulted and whole house would be taken - obviously he could start paying.

Well considering that my mortgage is for £200k of a £500k house, even if I stopped making repayments and the house was repossessed, it's highly unlikely the bank would sell the house at 60% below value - so DP would receive his equity back.

As I said earlier, I put down £50k and got a £200k mortgage for my half.
I've done several mortgages comparisons on a £200k mortgage for a £500k house, and a £200k mortgage on a £250k house - and the repayments are almost the same.
So I'm not benefitting on the financial side.

Sensing a tiny bit of scorn regarding finances; I'll point out that 4 years ago I was tens of thousands in debt from an ex using my credit cards and then vanishing when I was made redundant. I ended up moving into the industrial unit I stored my business stuff in, and slept in a hammock for a year.
I was bought up by a single mother with massive debt of her own (which I've now paid off for her). I have no qualifications.
In short: getting to this point has been extremely difficult.

If you are working as a couple I would:

See what his take home pay is
See what your take home pay is after you pay your mortgage (it doesn’t matter that he’s paid his mortgage - that’s done - not relevant to assessing reasonable disposable income between you)

Then split the remaining bills proportionally.

If you want to take into account your long working hours and his short working hours then you could adjust your take home after mortgage to the equivalent of 25 hours and base the bills proportionally on that but if doing that there is less justification for deducting the mortgage payments first.

And well done on your success. Your mum should be very proud.

🤣 someone paying half the bills and putting £250k into a property is a free loading hippy, some people really wouldn’t be happy with anything less than a partner paying for 100% of household costs.

How much are monthy costs excluding the mortgage?

How old is your partner? Saying £300-400 a month is only around £4,200 a year, so he would need to save at least £350 per month for 16 years to have £70k in savings assuming he never ever spent any of his savings.

You say the £250k is from paying his parents back for an interest free loan. So if he earns around £1,000 after tax he has between £650 left after putting £350 (the average) into savings, at £650 it would take around 380 years to pay back £250k. Even if the property was originally bought for £100k he would need to pay £650 per month for 14 years to clear it.

So in those years when all his money was either going into savings or his ‘mortgage’ how was he paying for council tax, utilities, food, clothing, repairs, travel to work etc?

@katy1213

50/50 - Why should your hard work subsidise his laid back lifestyle? He's not offering you a share of his equity in the house, is he? And why are you paying for his food? he's not your child. He sounds like a freeloading hippy - nice life if you can get it!

So if your partner paid for half of your joint home outright and paid 50% of all bills despite being on a lower income you wouldn’t ever pay for any food he may eat?

Why should he give her a share of his half of the house? If you bought with someone you weren’t married to and your deposit was 50% of the value would you protect your half, or gift it to your partner? If you were the lower wage earner would you also be a freeloader if you paid for 50% of the bills?

His deposit has subsidised her as it reduces the mortgage.

@SimonJT

🤣 someone paying half the bills and putting £250k into a property is a free loading hippy, some people really wouldn’t be happy with anything less than a partner paying for 100% of household costs.

How much are monthy costs excluding the mortgage?

How old is your partner? Saying £300-400 a month is only around £4,200 a year, so he would need to save at least £350 per month for 16 years to have £70k in savings assuming he never ever spent any of his savings.

You say the £250k is from paying his parents back for an interest free loan. So if he earns around £1,000 after tax he has between £650 left after putting £350 (the average) into savings, at £650 it would take around 380 years to pay back £250k. Even if the property was originally bought for £100k he would need to pay £650 per month for 14 years to clear it.

So in those years when all his money was either going into savings or his ‘mortgage’ how was he paying for council tax, utilities, food, clothing, repairs, travel to work etc?

The majority of his money came from a significant increase in his previous house value - in part due to a rise in local value, also for renovations he had done himself.

His deposit has subsidised her as it reduces the mortgage.
It didn't reduce the mortgage

@Mmn654123

If you are working as a couple I would:

See what his take home pay is
See what your take home pay is after you pay your mortgage (it doesn’t matter that he’s paid his mortgage - that’s done - not relevant to assessing reasonable disposable income between you)

Then split the remaining bills proportionally.

If you want to take into account your long working hours and his short working hours then you could adjust your take home after mortgage to the equivalent of 25 hours and base the bills proportionally on that but if doing that there is less justification for deducting the mortgage payments first.

And well done on your success. Your mum should be very proud.

Thank you :)

It didn't reduce the mortgage

It literally made the mortgage £250k smaller.

@SimonJT

It didn't reduce the mortgage

It literally made the mortgage £250k smaller.

Don't be facetituous, you know what I mean.

Why on earth should an adult subsidise the living costs of another adult they are not married to. All that results from that is his money is his money, and your money is shared. Which is not fair. If he were home taking care of your children while you work then of course that would be fair. But he is not doing that, he just enjoys his time off which you do not have the luxury of. Would you be resentful if he walks away in a few years time with all his equity after you have subsidised him thousands? The road to hell is paved with good intentions.

@WellIWasInTheNeighbourhoo

Why on earth should an adult subsidise the living costs of another adult they are not married to. All that results from that is his money is his money, and your money is shared. Which is not fair. If he were home taking care of your children while you work then of course that would be fair. But he is not doing that, he just enjoys his time off which you do not have the luxury of. Would you be resentful if he walks away in a few years time with all his equity after you have subsidised him thousands? The road to hell is paved with good intentions.

How is she subsidising him? He has paid his half of the mortgage and bills etc are split 50/50.

Hi Op, as your partner seem to have more time, then would make sense for him to pick up more chores, maybe even say 90% of it with you chipping in when you are home? ( cook dinner once a week, do the laundry once a week maybe?) Would you even have time anyway to do the chores as you're away?

Bills split 50/50 sounds fine. Luxuries - depends if you both have the same taste or not. If one of you have more expensive tastes then no.

Do you own the property jointly or is it a tenants in common agreement?
In some ways you are benefiting from a larger deposit with him putting in £250k down - presumably you would have got better interest rates because of lower loan values? Though 3.2% sounds high - is that on a 5 year fixed term?

Also your returns of 14% with Vanguard - that isn't guaranteed though - esp with a 100%equity strategy? I can imagine there is a disclaimer that says your investments can go up or go down.

For us, my husband and I are a team and we don't split anything because we don't have my money and his money, its all our money. We're married, not housemates.

You work 14 hours a day 7 days a week? Really?

I think you should be congratulated on what you have achieved. So well done on digging yourself out of previous debt, getting yourself on the housing ladder and being enterprising enough to earn a decent salary plus profits from your businesses. If you are happy to subsidise your partners food bill and treats that is your choice. You are not married and I can see little disadvantage or risk to you in your setup.

You may want to consider how this would change if you were to marry considering the balance of working hours and household contributions. Get a good SIPP set up for your retirement and you are on your way.

And I agree two hours of dogwalking a day is a big contribution to the household. Dog walkers can be quite an expense.

While I admire your ethic and your ability to make money when do you actually see your DP and what does he do in the 75 hours a week when you are working?