Existing solo mortgage, boyfriend, maybe buying a house

[flipperdoda]

Hello! I have a mortgage on a flat by myself, my boyfriend moved in about five months ago and we discussed the fact that after around half a year it would be fairest to him to go on the mortgage (as tenants in common, not joint, since I did the deposit and mortgage etc before he moved in). I'm happy with that and he's paying rent in the meantime. If we split I'd be able to buy him out and don't feel I'd be in a worse position. Tell me if that's wrong though!

We would also at some point like to buy a bigger home, which would mean a mortgage neither of us is likely to be able to afford alone (south east). I feel I'm risking the security of this flat by doing this without a legal commitment towards marriage, he has always seen buying somewhere together coming before marriage but understands my position too and is basically suggesting we stay here until we're both happy to marry, which seems kind of fair enough.

My questions are:
1 if he goes on the mortgage here, as tenants in common with a legal agreement done via a solicitor that all the money I've put in so far is mine in the situation of a split, and if I save the half of the mortgage he would be paying, are there risks I'm not seeing here? I recognise the flat could go up in value and I'd be buying him out for more than I've put away from my mortgage savings per month, but finances aren't a huge issue and I understand him wanting to be on the mortgage. It's a serious relationship looking towards marriage but it's too soon for that yet.
2 is selling this place and buying a house, again tenants in common to protect my larger share BUT unmarried as bad an idea as I think? If we split, it would be a massive upheaval obviously, and I'd lose out on moving and buying costs, but how unlikely is it (subjective I know) that I'd be able to get onto the property ladder solo again?

I'm late 20s, earn well, I think we will end up married but I'm not willing to risk being on the property ladder for a good feeling about the future. We have both compromised on this so far and neither of us is feeling pushed into anything despite having different ideal timelines, I just want some factual advice!

Sorry to clarify by "if I save the half of the mortgage he would be paying" I mean he will pay half the mortgage, as will I, and the half I used to pay but he now pays I would put into my own personal savings.

First of all - well done for buying a property in your 20's! That's a great achievement in itself.
Secondly - it's a very wise move to be thinking ahead of ways to protect your investment in your flat that you've worked hard for.

Tenants in Common is a good way for unmarried couples to protect their investment. I would suggest you undertake a lot of research, and do not proceed any further until you are absolutely certain you understand, and are happy with, all the implications of which there are many - some good, but some not so much (and you need to try to mitigate these).

Here's my ideas of what to look for/be aware of... but I am not a financial or legal expert so it's just ideas... do your own research.

Mortgage - your lender would have to agree to this or you would need to switch. Your bf would undergo credit checks and affordability checks as for any new applicant.

The legal framework

• you would each own a share in the property, but it wouldn't need to be an equal share. You could take account of your previous investment. For a simple example, if the flat is now worth £100K, and you invested £20K in deposit, fees, upgrades etc. You could deduct a 20% share for you, and split the remaining 80%. You would have 20% + 40% = 60% share, leaving your bf with the remaining 40% share.

Some possible pitfalls.

The legal part involves setting up a Deed of Trust with added costs.

Your bf would own 40% share. Unless every scenario is covered by a legal agreement, it would be up to him what he did with that if he wanted out. He could sell it to someone else, he could default and refuse to sell his share to you, risking the possibility of repossession. He could force a sale and refuse to sell his share to you.

If he passed away, you would not be entitled to his share (unless he left a will). His estate would pass on to someone else - who might decide to move in, or sell their share to someone you don't know.

Questions to think about:
Would the mortgage limit your financial liability if your bf defaults on payments, so you would only be liable for your share. (This is not the case on a joint mortgage where both parties are fully responsible for the whole debt.) How would a default by your bf affect your credit score?

What would happen if one of you couldn't make payments on the mortgage?
How would payments for renovations and repairs be split?
What would happen if one of you wanted to move out? Or sell at the highest possible price, which the other thought unreasonably high to buy them out?
Or wanted to move someone else in?

Good luck - exciting times ahead!

I have just realised I didn't answer your second point about remaining Tenants in Common if you move house and don't marry.

Advantages: You protect your own assets, particularly if you have the greater assets and higher earning potential. Financially, at least, a split is easier to manage. You have greater freedom to manage your own finances, and make your own financial choices.

Disadvantages: Being unmarried can seriously disadvantage you if you are planning to have children, or if you lose your earning potential (through illness for example). If you have a child, you will be taking some maternity leave. Perhaps you will need to work part time even, in the first few years - or leave work altogether if your child has SEN or serious illness. Perhaps you will have several breaks in your career as more children come along.

Meanwhile your bf continues blithely on his unbroken career path, building up his salary, pension, savings and assets. If you are married and split, all these things are family assets to be shared out - the pension, the savings, the house, which you've enabled for your bf, by taking on the maternity leave, the unpaid childcare, the hit to your career prospects, the break in career training. Of course it's not always the woman who takes on this role, but in general it is still very much the case.

Without marriage, you will be able to claim some child support - (we all know how reliable that is!), but have no further claim to any of those assets which you helped your bf to establish.

Swings and roundabouts....

Don't worry I'm categorically not having a child without being married, he was made aware of this very early on, he's on onboard, and it's probably my one boundary around all of this that won't be shifting ever! (The only reason that mortgage/house ones might is based on facts).

Thank you so much for the in depth answers. Yes, I am the one with more assets and a higher salary, so thinking about it this afternoon marriage is actually more of a financial risk to me at the moment than a joint mortgage is.

I don't mind additional costs to set up the mortgage properly in terms of protecting me - I'd probably ask him to pay the costs of being added to the mortgage and I'd pay the costs of protecting myself...or we'd split it all 50/50...not sure but we discussed the extra costs being necessary before he even moved in and I won't be taking them all on myself.

I was aware of the way that an e.g. 20% deposit resulted in a 40/60 split, and was aware we'd need to make wills (though obviously he could change his without telling me - not that I think he would, but thinking worst case here!). I hadn't really considered that he could theoretically just refuse to sell me his share if we split, or default etc.

Good points to discuss RE what if one of us can't pay, payments for repairs etc - on this point I'm 99% certain he'd be expecting to pay 50% and he does earn well despite me being the higher earner so I can't see it being a massive problem but it's always always worth being clear beforehand with this stuff!

It's definitely making me realise that the "safe" option of adding him on the mortgage here isn't actually all that safe which is really good to face up to.

To be honest, I earn 40% more now than I did when I got my mortgage, and have saved almost my deposit amount again...so I'm starting to think if I'm taking on 80% of the risk by adding him onto this mortgage anyway, maybe there's not that much reason to put my foot down about not going to a bigger house, given that my buying power is so much higher than it was when buying this flat 1.5 years ago, even if house prices go up etc our house would likely go up a similar amount and I work in an industry that's got a lot of jobs. No job is ever safe but comparatively mine's pretty good.

This isn't bragging - I recognise I'm very lucky to be in this position, I'm just trying to look fatcually at the situation.

Adding him onto the mortgage = x amount of risk
Buying a bigger house together = x + y amount (split would not be as simple, but lots of the intrinsic risk of a tenants in common mortgage remain)

But benefit of bigger house, seeing how he deals with the searching and financial side, allowing repairs and renos etc on a house that's completely ours, not having that odd 'its our flat but it was yours first' (on both sides! I'd feel ultimate responsibility for it I think forever!).

It's just how much bigger y is that I need to try to quantify!

I'd not charge him rent but not put him on the mortgage. That means he can save up for if you split. I'd merge finances when you marry, or when you want to purchase a house together. And then I'd do a joint tenancy 50/50, put the same into the deposit etc.

Wow, amazing update! You seem very financially savvy! You'll do just grand 😁.

Ok, having read your update, here's another possible option...
Keep your flat in your sole name. In 6 months time buy another property together as Tenants in Common (perhaps equal shares if that suits - less complicated working out expenses and repair cost allocation between you).

Rent out the flat.

Advantages: You are equal partners in the new property.
You have a sole stake in the flat, and partial stake in another place. The two are completely separate. Only one set of Deeds of Trust to set up on the new property; no selling fees.
If all works out well you can sell the flat at a later date and add to your savings/pension or family pot, or buy a bigger place when/if children and marriage is on the cards.

If things go belly up, you have kept your investment in the housing ladder with little risk of bf disrupting your plans. You will have a separate source of income if you can't work, a bolthole to move back to if necessary, and somewhere to wait it out whilst the legalities and practicalities of unravelling your joint property are sorted if you split.
If you decide not to marry but still have children, you will have a independent rental income source for maternity cover and other eventualities that may come along.

Disadvantages: It will limit the size of new the property you can afford.
Being a landlord/landlady can be a pain!

@RedHelenB he already has the chance to save at the moment, he's paying half of his old rent (which is less than half my mortgage, but we both end up better off!). I wasn't happy for him to live here for any length of time without paying something towards wear and tear etc and he didn't feel it was fair either. Also if I was in his position I wouldn't want to move in with a partner and never be allowed on the mortgage so I don't feel it's fair to expect it of him! We won't be able to put the same into the deposit.

Merging finances is however an option to discuss but frankly the large costs are bills (already shared), mortgage and house stuff (would be shared with a new house), and cars...which aren't shared but I'm not convinced it makes sense to fully merge just for that. Hell of a lot of potential untangling if it all goes wrong!

@seekingasimplelife reasonably fincially savvy, and proud of it, but also don't want it to stop me actually living life it's a fine balance...not sure I'm anywhere near finding it yet!

Your option makes a huge amount of sense. The main issue being I have zero interest in being a landlady. Like, really desperately don't want to have to do it! But I will consider the option, because you're right it means I can pretty much just unwind everything to where I am now (plus a whole load of heartbreak!) if everything goes wrong.

@seekingasimplelife reasonably fincially savvy, and proud of it, but also don't want it to stop me actually living life it's a fine balance...not sure I'm anywhere near finding it yet!

Your option makes a huge amount of sense. The main issue being I have zero interest in being a landlady. Like, really desperately don't want to have to do it! But I will consider the option, because you're right it means I can pretty much just unwind everything to where I am now (plus a whole load of heartbreak!) if everything goes wrong.

This would be so much easier if I didn't own! I'd be happy to buy a house with him in the next year if I didn't own, so part of me thinks well then just do it, and the other half goes yeah but don't risk losing this. I hate being sensible sometimes

Skim read so this may have already been mentioned.

I would, if possible, keep it in your name.

Your BF would be a first time buyer, which could benefit you BOTH in the future - only one had to be a first timer when I looked before I bought my house to benefit from the government schemes - plus, it protects your own property in the meantime!

Investigate the feasibility of handing over the running of the rental flat to an agency that does everything for you, perhaps? And take out the maximum insurance protection for non payment of rent etc. Although this will impact rental income, you can (hopefully) take a hands-off approach, and delegate all the work involved to someone else. Worth investigating, I think.

I wouldn't add him to the flat at all, and then buy a home together with a declaration of trust when you're ready for a house. More time for him to save up.

What is the big rush ?

It is your property, there is no need to add him onto it at all, ever.

You can charge him rent or half of bills if you wish

I would definitely not add him onto this property. Wait until you buy together or marry.

Protect your assets

How long have you been together?

I wouldn't add him to the mortgage yet.

It sounds like your heart is ruling your head

Why are you so keen to give away half of your existing asset ?

Far too soon

My partner had his own mortgaged house when I moved in, we decided to remortgage onto a fix, the house was valued and I put the amount of increase of property value from buying to valuation (3 years). It brought the mortgage down and we had equal shares in the property.
It seemed the simplest and fairest way.

If you’re considering not staying in your flat, what is the need to go for something larger? You sound quite happy with your flat and at the moment, he doesn’t own anything so surely a share of your flat would be a good start.

You are being able to save well at the moment, but it’s a funny time to be moving to somewhere bigger, unless you need to. House prices are vastly overpriced and will drop eventually, which will eat into your equity. All that cash you’re currently banking, could eventually go into your next step up, but paid for in cash. A larger mortgage means paying more in interest, which isn’t financially savvy unless you desperately need the space and at a time when houses are overpriced. Interest rates are going up as well, so that next step could start to cost you a lot more.

I’m not suggesting you don’t move, but I’d be wary about taking on something much more expensive if you don’t need to.