Buying a house

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Buying a house with my partner. He’s putting in a bigger deposit, I’d be paying exactly half of the mortgage every month (interest + capital). He thinks that if we ever sold, we should each get our deposit back and then split any profit in proportion to what we put in initially.

I’m uncomfortable with that because the deposit is a one-off and comes back out on sale, whereas the real risk and equity building is in the mortgage, which I’d be paying equally. To me it feels wrong to pay the same for years, take the same debt risk, but come out with less.
He says his extra deposit benefits me via lower monthly payments and that he could otherwise invest it in stocks and shares but this doesn't make sense to me. Anyone could do that though. I think he's incorrectly linking the deposit to the mortgage debt.

In his version, we take out lets say a 400k mortgage. I contribute to this equally. Let's say we separate having paid off 200k. Id come out with 50 and him 150k but we'd have both paid equally.

AIBU for thinking that if we split the mortgage 50/50, any equity created by paying it down (and any increase in value) should also be split 50/50? Or that if profit is weighted, the mortgage costs should be too?

With his logic you both pay monthly payments according to your deposit % also. Then his way works.

I agree with Florida. If he wants you to take out proportional payments should anything happen, then you pay proportionally towards mortgage payments too.

I’d go to a solicitor and jointly get their advice and get an agreement signed up.

What we have done is calculated the amount of equity each of our deposits bought and ringfenced it. Then halved the rest.
So, on 400 property I put down 20k and my ex put down 40k. I owned 5% outright, he owned 10%. After the sale, that's what we took out accounting for change in value and split the rest of equity according to mortgage contributions.
But my ex was a decent bloke. We didn't even firm it up legally, just went with what we agreed before the purchase.

My partner and I have a similar arrangement and we have a written agreement that states that he will get his deposit back in full and we split the remainder based on our proportion we paid into the mortgage (I pay more than him).

It seemsright that you each get back your initial contribution.
After that is the tricky bit.

If you each contribute half to the mortgage (and if you were married it would be deemed that anyway) then you would split what is paid off in half.
If you each contribute proportionally to the repayments then obviously it would be owned entirely in proportional shares if you were not married.

Seek advice from your accountant. Agree on how you will proceed before purchasing.

My ex and I agreed that we would both get our deposits back as the same percentage of the sale equity that they were of the purchase price, then split the rest 50:50. That still put a bit more risk onto him but he was comfortable with that.

How much bigger is his deposit? If not much, could he pay less, accepting a slightly higher mortgage rate, to keep everything 50:50?

I agree with him. His deposit keeps the mortgage payments lower. Could you even afford to buy without his deposit?

The difference for me is linking a fixed one off deposit to the debt of the mortgage which would be paid equally. If Im paying down the debt at the same rate as him, I'm buying the same amount of the remaining property interest. So on sale, we each get our initial payments back and the rest is split because the mortgage repayments were exactly the same. In his version, I would essentially be subsidising his name equity in a stake id contributed to exactly. Also, he couldn't afford to take out the mortgage without my significantly higher salary.

He’s not treating you fairly but using you as a means to help HIS finances grow as the expense of yours.

How will you split bills? Proportional according to earnings or into a single pot so that you both get equal amount of fun money after all bills are paid?

Does he spend a lot of money on his hobbies?

What shitty excuses does he use when you point all this out to him or does he actually stop to think about it and seriously consider things from your perspective?

(Guessing the former!)

Don’t agree to the house purchase until you’re both on the same page regarding finances. Definitely don’t have children with him unless he has a big attitude change.

It might not seem so bad now but Love is not enough to sustain you from years of financial abuse when you’re stuck at home with young kids and your career has stalled.

Outrageous that anyone could agree with him.

Fair to each get your deposits back. Fair enough if he doesn’t want to split profit 50:50. BUT that means monthly mortgage payment isn’t split 50:50 either.

He is wrong, and I would be put off buying a property with him if I was you.

To add, make sure that you get fair and accurate legal/financial advice. But if you’re planning on having children etc, you need to factor in what happens when you’re on maternity leave etc as he seems like he’s out for himself, and is not a fair team player

I agree with him, to me it’s fair. That deposit money is his. You’re both then paying 50/50. So if you split, you each get back what you’ve paid in.

I should have explained properly. I agree we get our deposits back in full. He thinks the mortgage is split equally but when / if we sell or split, he gets the deposit back plus a greater share of the mortgage we've paid into. Am I making sense? I think if we're paying monthly mortgage costs jointly, then this is split equally and of course deposits returned.

Doesn’t sound to me that your relationship is in the right place for such a big joint commitment

The equity should be split by the overall proportion paid by each of you.

So the overall investment is the deposit + 50% of the amount the capital was paid off during the period in question. He'll still see the benefit of his higher deposit, but in a fairer way.

You should also take into account the cost of any improvements that will improve the home's value - so if you paid 20k for a new kitchen and he contributes nothing, then £20k is added to your investment calculation, while nothing is added to his.

Wait, I think I've misunderstood. He wants his deposit back AND a higher % of any additional equity? No, no no no no.

Fine get he gets his initial deposit amount but everything after that should be split 50/50.

So by his logic, if he put in a £2 deposit and you none, and you each then paid off £199,999 of a £399,998 mortgage, he should get the entire house.

And this is why the correct way to do things is to marry, then a house, then a child.

Traditional but also correct.

You’re both not wrong, but your solutions are. If the property is sold, you should first take out your upfront costs as a percentage of the purchase/sale price, and split the remainder equally.

For example:-
Buy a property for £500k, he puts in £75k, you put in £25k, mortgage of £400k

Sell the property for £550k (that is, +10%), outstanding on mortgage £300k

• he gets £82.5k (deposit +10%) + £70k (equal share of equity) = £152.5k
• you get £27.5k (deposit +10%) + £70k (equal share of equity) = £97.5k

This makes the most sense. If the house is £500k and he puts in £50k deposit, then 10% of the selling price is his. If you put in £5k then 1% of the selling price is yours. Then the equity is spilt 50-50.

Two PP have a good solution.

Your partner’s down payment is X% of the price and your down payment is Y%.

When you sell(if finances are separate) he gets X% of the sale price off the top and you get Y% off the top.

Assuming that not only mortgage payments but other significant housing expenses are shared equally, you split the rest of the sales proceeds 50-50.

This reflects the fact that he has tied up more capital without being anything like as drastic as his proposal.

PS Apologies to @Thingsthatgo who posted the same suggestion while I was writing

This seems fair.

If you purchase 5% of the property up front, you get 5% of the value back when you sell, then the rest split as per your ongoing contributions.

If there's mortgage remaining to be paid off, I bet he wants that to be taken equally out of the sale proceeds, so what was paid for should be too.

This is a great way of doing it and accounts for if you sell at a loss as well