Please advise me - buying into dp's House

[Cheeseandlobster]

I am about to apply for a mortgage to buy into dp's house. 45 percent Ltv for a 50 percent share to reflect the time I have lived here for and contribution I have made already. This will mean dp will become mortgage free.

When the mortgage company ask for the ltv do I say 45 percent? We will be tenants I'm common so his share won't be repossessable in the event I default. Obviously I won't be doing this but the mortgage company won't know this.

So how will it all work? I am very confused !

OP I really don't think yo will be able to get a mortgage the way you describe. I've never heard of a bank giving a mortgage to a house where they have no right to title if the mortgage isn't paid.

They couldn't repossess the house. They wouldn't have any right to charge your partner rent. Your 50% share would be effectively worthless.

What would be 'normal' in the situation you're describing would be for you and your partner to jointly remortgage what is left, and for you to pay 50% of it. So: House is worth 100k, with 30k equity. You pay 15k to your partner then you both remortgage the 70k due to both your names adding yours to the deeds, and pay the mortgage equally.

I assume you haven't spoken to a bank or broker about the proposal you outline because I don't see how it would be possible. Can you share how much equity is in the property already, how long you've lived there and how much you've both contributed?

As @leakymcleakleak has said - it doesn’t work like this in reality.

Are you proposing he sell you half the house and he uses that money to pay off his mortgage? So he’ll be mortgage free and you’ll have a mortgage for half the amount?

I’m not sure that’s even possible for him to sell you half a house?

You’re better off waiting until his mortgage is up for renewal and apply with him and then may the repayments. Oh and get on the deeds!

He is older than me and has a low self emoyed income so he would not qualify for much of a mortgage. When we tried to get a mortgage jointly a few years ago the amount I could borrow was less with him than without him.

I have lived in the property since 2015. The property is worth about £120 but has a second charge on it from a council loan of £19k when they were giving loans for roof repairs etc. This has to be repaid if he sells up. His mortgage at present is for about £25k ish

I feel very vulnerable in my position with no security. Especially in the event of his death. I am 43 and I really need to do something soon.

I also found something about promisary notes but I don't know if they are only legal in America? I would have to sign a legal deed to promise to pay him x amount?

I would go and see the mortgage adviser at the bank/building society - they will be able to advise; speak to your conveyancor too as you may need to get a legal agreement drawn up

(Although it will cost extra its a small price to pay in the longer term and will give you peace of mind)

OK OP the situation you are describing is a bit like this:

House worth 120k. Equity = 76k (minus the 19k council and 25k mortgage). Currently all in his name (loan and equity). From a protection point of view, he can write a will leaving you the house, and take out mortgage protection insurance if he doesn't already have it, but he can obviously change that at any point.

So to clear the mortgage and charge you would need to get a new mortgage of 44k. How much could you borrow on your income? How much can you borrow jointly? How much of a cash deposit have you saved?

You say he's older so you're probably looking at a shorter term, say 15 years. Assuming you can jointly borrow 44k over 15 years, that's what I would do, minus any cash contribution you have saved, then have your name added to the deeds as joint tenants, and pay all mortgage repayments jointly going forward.

Then the question is, how do you pay him back 'his' share, and how do you protect yourself? You say you have already been living there and contributing. So: does he think any of the equity in the house is yours? Do you have your own cash deposit? If you want to buy out 'his' share the sensible thing to do is to use any cash you have towards that. So if you are going to be a 50% owner, 'his' share is worth 38k. But if you've contributed, presumably he'd be willing to reduce that, the question is to what - 30k? 25K?

So I guess there are different ways to do it. If you have cash, and can secure a joint mortgage, I would set up a transaction where you use your cash to pay off the mortgage then jointly remortgage for a lower amount, and what you contribute in cash comes off the 38k (or whatever amount you agree) you 'owe' him for a 50/50 stake. Then you could simply agree that you will pay all the mortgage repayments for the first year or two (depending on what they work out at) until you reach the agreed amount, then you will be even, then you can start splitting it again.

That is one way, it sounds a bit complicated but so is the situation you're describing. I think for security, you want to jointly own the house: you could own it in shares (as tenants in common) but then he can leave his half where he wants if he dies. Think about what is acceptable to you both, and particularly think about how much he wants for his 'share' and how much you can realistically finance. Then get proper advise.

Thank you everyone. Especially @leakymcleakleak . Your post makes everything much clearer. I think we will definitely need to get professional advice. Dp said he would give me £5k equity. I don't think he has considered paying off the second charge as it only becomes payable if the house is sold but we have also talked about buying another house with his equity and a mortgage at some point. On my salary I could probably borrow £110k or so but not over 15 years. More over 20 to 25 years. Its so complicated 😫