Is there a way to protect equity in a joint mortgage?

[Anonymouse2019]

Hi,

I own my current property and I'm the only one named on the mortgage. I bought the house 12 years ago and have a 25 year mortgage (13 years remaining).

My partner moved in 5 years ago and we have two young children together.

I have a lot of equity in this house and have recently come into some money meaning I have about 110k to put towards a new mortgage on a new house. That would be the deposit, and most of that would come from the sale of my existing property.

We want a joint mortgage, however my partner has no property or savings of his own. Buying a house where we'd like to live wouldn't be possible without his income too (he works part time due to family circumstances), hence one reason we want a joint mortgage.

If I'm putting around £110k into a new home, what happens in the worst case scenario if our relationship breaks down? There's no current reason why it would, and I am not anticipating a split, however I want to protect my assets if such a situation were to arise. I'm guessing if we have a joint mortgage then legally he'd be entitled to half the house, as it were, but having not contributed to the initial deposit, which is a substantial amount of money.

Does anyone know if there's a way I can protect my assets please? Thank you.

Hold the property as tenants in common rather than joint tenants. You can then split ownership however you want.

Yes. You need to be tenants in common with the division clearly stated

Speak to your solicitor and have a deed of trust drawn up. You can specify what is already yours (including equity up to this point) to protect yourself and what % you'd be happy to share going forward (if that's what you choose to do). X

As long as you don’t get married you can, but you need to get something properly drawn up.

https://ridleyandhall.co.uk/should-you-as-a-joint-buyer-of-a-property-ringfence-your-deposit/

It may be different depending where you are. However, its not the mortgage that gives you ownership rights its being on the deeds. I would advise owning as tenants in common and getting a deed/declaration of trust. It states what should happen to equity upon sale. E.g. you get the first £X, then you split the rest equally etc. Pretty much everything you do would be invalidated by marriage though if thats on the cards.

Ask your solicitor to draw up a declaration of trust which sets out how the sale proceeds should be split on any sale. The property also needs to be held as tenants in common.

All you need is to be tenants in common with a deed of trust stating the % each of you own. If your deposit is 50% of the purchase costs, and the mortgage is split between both of you equally, then you’d get 75% and he’d get 25% of any total equity should you have to sell.

Tennants in common and don’t get married. As soon as you marry, regardless of the paperwork he will own 50% off all assets

No, marriage does not change the ownership of assets. It means the assets go into the pot to be divided between the couple if they divorce. Whether he would get 50% of any assets depends on a range of factors. If they own the property as tenants in common with a declaration of trust setting out the proportions in which it is owned, the court will consider that but is not bound by it.

If OP marries her partner, she should seriously consider getting a pre-nuptial agreement.

This is not quite right. OP should get 75% of the gross sale proceeds and deduct from that half the mortgage debt. Assume she pays £100k and they get a £100k mortgage. 75% of the equity is £75k.

I was in a similar position but the mortgage is still only in my name , I have a declaration of trust that the first £130k of house sale goes to me and any other proceeds are halved as we pay 50/50 on this mortgage and are married

Thank you all so much. I'd never heard of the terms 'tenants in common' or 'declaration of trust'. This is really useful. Thanks so much (and for all answering without judgement too!).

Buy as Tenants In Common
Specify your deposit, talk to the solicitor about how to protect the value of this not just the cash cost (because if in future house prices rocket again you will probably want to see the relative value of your investment in the house rise accordingly. If you do not do this you may not have enough to buy another house on your own in future)
Don’t get married

P.S and make a will, leaving your share of the house directly to your children, but with a life interest for your DP.

Who is responsible for major repairs?

Major repairs or improvements shoud be paid for in proportion to the value of respective interests. Normal upkeep (eg decorstion etc) should be equal.

I only asked because often it isn't written down in the Will/any where so there is conflict when say the roof needs to be replaced over who should pay for it.