Buying into my house

[kefaloskid]

My lovely DP moved in with me last year and we have decided that we both want him to buy into half my house. I have an outstanding small mortgage of 35k so does this come off the valuation then we split the remainder in half? Or does he just pay half the total valuation? Thanks for any advice

Get decent legal advise for god sake. And at the very least ring fence everything your end so in event of a split he can't touch it. I would never let a partner do this actually he's getting half your house for doing Jack shit. Can't you sell up and then buy something together.

Yes we are doing that thanks just thought I'd ask on here first 😊 we have looked with a view to buying together but have decided that it makes more sense to keep mine and we both prefer it anyway to anything we've seen. Not sure why you think he's done jackshit as he's going to pay the going rate!

Done Jack shit as in not put deposit down not contributed towards the mortgage until he moved I last year probably. If the agreement you have is not iron clad he will walk away with much more than he's put in, it might be all lovely now but if it all goes down hill you will have lost out. But that's up to you.

This

So he would pay you a lump sum of half the current value of the house - or of half the current value minus the 35k mortgage and then you'd each pay half the mortgage?

Does he have the cash or does he need a mortgage or loan to cover half the current value?

If a mortgage then you'll need to be careful the house doesn't have two mortgages against it, surely?

Personally, there is no way on earth I'd sell half my house to someone who wasn't a spouse and who only lived in a year ago. But if you do this, please make sure you're agreement is something you could live with if you had an acrimonious split.

Be really careful with this & take legal advice. It’s not really in your interests at all to do this. However, I’m sure he’s super keen to get his hands on half your house.

Love is blind. Have you heard that phrase?
Be very very careful & as others have advised, take separate legal advice.

Something similar was done by my friend. Her chap came into the relationship with only a baggy pair of Y-fronts! They were together just ten years.
He walked away with £50k cash and one of her pension funds.

The answer to your question is that if he is buying 50% of the house then he needs to pay 50% of the valuation (which should have an inclusion for all current fittings/ furnishings etc that would not normally be included in the sale).

What you do about the mortgage depends on whether you need to keep the mortgage after he has bought in or whether he is a 'cash buyer'.

As a cash buyer then he gives you half the value of the property and you use some of that to pay off your mortgage.

If you need to keep a mortgage between you then you need to work it out in shares. So if simplistically your house is valued at 100k and your mortgage is 35k currently you own 65% and your mortgage company 35%.

If he is going to share the mortgage then he buys 32.5% from you as half your share, you retain 32.5% and your mortgage company owns 35%. To do this however HE MUST go on the mortgage otherwise even if he is paying half the mortgage if he 'wanders off' then you are left paying the full mortgage on the 35k despite now only owning half of it.

You could decide to keep your mortgage solo if he has his 50% in cash so that your share and the mortgage share adds up to the other 50%.

But yeah... get proper legal / financial advice.

My reading is that he's going to pay you half of current market value, is that right?

So for instance, house is worth £400k, he's giving you £200k. You'll both co-own. Have I understood correctly?

So actually rather than doing "Jack shit" he's paying his fair share. In fact, if house has risen in value, he'll actually be putting more in than you.

I think PPs are getting confused and not understanding your post. If he's happy to front you half the cash, then selling up and buying together is actually a whole load of estate agent fees and stamp duty. Completely unnecessary and expensive.

If I were you I would:

1. have the house valued by three different estate agents to get a fair sense of value now.
2. think about whether you want to be tenants in common or tenants in trust. If you're going 50/50 then it doesn't matter as much in terms of ownership, but has inheritance implications that need thinking through.
3. work through the outstanding mortgage bit. My instinct is either he pays you 50% of total house value and you pay off the remaining £35k mortgage with no input from him. OR, he pays you half of what you currently own and you split the remaining mortgage payments 50/50. (E.g. say house is £400k value with £35k outstanding. Either he pays you £200k and half the house is his. You're responsible for the rest of the mortgage (which you could pay out of the lump sum he's given you) OR, he pays you £182.5k and you split the mortgage payments. The latter may be tricky depending on whether mortgage company lets him join the mortgage.

One question for the solicitors would be around capital gains tax. It's not at all clear to me, but I think unless you're married you might have to pay this. Conflicting advice online.

Also talk seriously with him about how other bills etc will be shared, just so there's no nasty surprises.

Sorry - one thing I meant to add. Is he a cash buyer, or will he need a mortgage. The former is straightforward, the latter will need some more research in terms of what's possible.

So you did the hard work of getting a deposit together, paying the fees, paying the mortgage… you now barely have a mortgage to pay off (£35K is a huge amount of money but bob all in mortgage terms) and you’re going sell half your asset?

Is that really the right financial decision?

Especially when you don’t even know what you want to do, and are turning to a non specialist chat forum.

What are you going to do with the money from him, and is it a better investment for you than keeping it in the house?

I would also fast forward yourself 5 years and imagine a scenario where you split up, and need to buy him out. Let’s say your house is worth £50K more.

How will you feel about having to find more money than he gave you, to get back what was your home in the first place, almost owned outright?

Of course you may have invested his purchase money and gained far more money. But if you haven’t… I would be sick as a parrot having to buy someone out of a house I once owned.

Thank you great posts in answer to my question - that's really helpful. Yes he's a cash buyer and he's been more than paying his way since he moved in although obviously not contributing to the mortgage. We both have adult kids so the inheritance and ring fencing our halves is something we have already talked about. One thing I hadn't thought of is the fittings and furnishings value so thanks for this!

I have other investments etc so am absolutely fine about this - and as I said asking on here is no reflection on me not being financially astute, of course I would get legal advice. Mumsnet is quite hilarious with the posters who seem to peruse it just to have a go at people. Thank you to those that haven't made wild assumptions about me or our situation. Your advice has been great.

What happens if you split up?

If he then wants to leave and for you to buy him out will you be starting a mortgage from scratch?

I think owning a property with someone is the single biggest legal commitment you can make with all the unravelling. A divorce costs £500 and seems pretty straightforward. But a mortgage?

I would decline and tell him he can live at my house but sorry he is not going on a mortgage that I have almost finished paying off.

If he doesn't like that he can do one, and it would be clear at that point what his true priority was (you, or being on those deeds)

That is a good point and yes we have discussed this. Truth is I would like to have the cash to invest elsewhere and do work on the house to improve it with him sharing the cost. If I didn't want him to buy half he would be fine with this. He is not short of money himself.

Does it have to be 50/50 ownership? You can have a deed of trust drawn up to specify exactly what percentage each (as tenants in common).

If he has cash to buy into 50% then you'd be best to use some of that to clear the mortgage. But rather than go 50/50, would it not be better for both of you if he buys in at whatever percentage share the 35k remaining mortgage is? Then the mortgage gets settled, he has a (presumably small) share in your home, and he can use the remaining cash to invest in another property. Then if the worst happens and you split up, you have a better chance of buying out his small share and he has another place to go to.

Don’t do it!!

Why doesn’t he own his house already?

What would you kids think about potentially losing half of their inheritance to mum’s new boyfriend and adult kids?

You are being really naive.

If you want to be 50/50 tenants in common then he needs to give you exactly half the full value of the house. Its a good deal for him as no stamp duty to pay. Dont be joint tenants as you cant leave your equity to your children, it would go to the other tenant. The main thing would be to ensure whatever money you get is well invested so its enough to buy him out again if you do split and you dont want to have to move. Then I guess he would pay you half the equity in the house and you decide if you want to carry on paying the remaining monthly mortgage, or if you pay off mortgage in a lump sum are there early repayment fees due? If there are then perhaps he needs to go halves in that too as that is a cost of the transaction, just like stamp would be. Proper joint ownership is a better footing for the relationship to be on - just ensure all future repairs improvements etc are equally paid for too. And don't value any DIY he does over your domestic contributions, time you spend working in the house is just as valuable as his time and work (been there worn that hat).

I'd ask for half the current valuation minus the mortgage than pay 50:50 on the mortgage going forward. I think it's quite a fair proposal. But I would say that. My DH owned a house and just put me on the mortgage with joint tenancy the next time we moved.