Buying a second house with a first time buyer - help!

[Tissle]

I'm after some advice from people more experienced than me (not difficult)! I own a house with my ex partner and we still live together as friends until our mortgage runs out later this year. My new partner and I are buying a house together and he's a first time buyer so we thought it would be a good idea for him to buy the property and be able to be chain free/not incur SDLT with a view to us officially jointly owning it once my house is sold. The plan is to split the deposit with both our savings and then I'll put the money from my house sale into the new house by overpaying over 2 years so as not to incur charges. He's secured a mortgage on his salary and he's a much higher earner than me so he's going to pay the mortgage until I can contribute.

Anyway, it's now at the point where we've found a house and had an offer accepted. He needs to firm up the mortgage offer and the broker has asked if any of his deposit is a gift, which I assume my money falls into the category of? I naively just thought I could transfer him my money and I trust him implicitly (we've been friends since we were 13 and we're almost 40!) so that's not an issue. To make matters more complicated the house doesn't meet the SDLT threshold as it's under 250k so I'm now wondering what the best approach is; can I go down as an investor and be on the deeds with my deposit share but not the mortgage? The plan is that I'd be on the mortgage once my own house is sold and I would be on the deeds - is this possible within the first mortgage term or would we need to wait for the initial 2/5 years to be up? Or could I go on another mortgage but with £0 income or would this have implications as I'd technically own a second house.

Any advice or experience would be appreciated.

If the house doesn’t meet the SD threshold anyway, why are you making it all so complicated? Why not just buy the house jointly?

Wait until the first house is sold and then buy a property with your new partner. There are too many things that could go wrong if you do it the way you suggest and you have to pay stamp duty on a second property as well.

I'd wait until you get out of the mortgage with your ex. Are the early repayment charges on the term that onerous? could you not just pay those and exit now?

I'd be wanting to do things properly in case it all goes tits up and you lose the lot.

I am in the process of buying a house with my partner who is a FTBer and I'm just paying the early repayment charges on my mortgage to buy with him, and we're splitting the stamp duty costs as even though he wouldn't have had to pay them, I'm bringing equity, which reduces our mortgage rate, so it evens out.

It doesn't matter if it's under the threshold and you're a STB. Agree with PP, this all seems very overly complicated.

Agree with PP, this all seems very overly complicated.
And rushed. You haven't even lived with this new guy yet!

Talk to your mortgage adviser & solicitor. They are the best people to advise

Thanks everyone for your responses.

To answer questions:

It's not exactly rushed, me and 'new guy' have been together for over two years now and we have been close friends since we met at school. He lives in a town which is 25 miles away, so I have been mainly living there with him but my ex partner has been living in the house as our mortgage was for 5 years expiring late this year. He has now secured a new teaching job to start in September in the town where I live so that's one of the reasons for sorting our a house now, so he doesn't need to go into rented. Also, I was keen not to be in a chain so I thought it made sense and originally we were looking for houses over the SDLT threshold.

I had assumed I couldn't go on another mortgage as I already have one with my ex partner and that there would be implications for owning a second home, but perhaps this is something that I need to look into.

Interesting point. I did check the ERC as it wasn't that much, but I was terrified of the stress of being in a chain (I'm a stress head at the best of times). We managed to get the house we've found for less than the other offers due to my partner being a FTB, so I feel like it's probably worth it.

It's all to do with affordability according to your mortgage company's criteria, so that will depend on salaries, other outgoings etc etc. This is why any money you put into the house would have to be a gift. If you class it as a loan your DP theoretically has the cost of repaying it, which is taken into account. If it is a gift you have to sign to say you have no claim on it.
That's why you need to talk to the mortgage company/broker.

If I was you I would rent a place with your boyfriend until the house with your ex is sold. Then you wont be in a chain, and can look at houses together at your leisure.

We are in property buying/selling hell at the moment and I would love to be in rented while looking for somewhere to buy instead of our awful chain.

Don't rush things. The market is bloody horrible at the moment and things might be better later this year.

I could certainly afford to contribute to another mortgage, even if it wasn't half of it which my partner isn't expecting anyway as he can afford it on his own whilst I have my original mortgage. I need to ask the mortgage advisor if I can go on the mortgage then. I understand the gift thing, but I thought I could go down as having contributed to the initial deposit without being on the mortgage.

Yes, we considered renting but we wanted to avoid moving twice and not wasting money on renting as it's extortionate. I hope your chain-hell doesn't drag on for too long!

I guess you could…we gifted a considerable sum to our daughter for her flat purchase. And all her solicitor required was a signed letter confirming that it was a gift not a loan.

You will also have signed to say that you will not live in the property, will not have any claim on it & it will not have to be repaid. There may be other standard forms for the OP's situation, I have no idea, but the mortgage company & solicitor will.

Well yeah, but that's the point of the post: I wanted to know if there was a way for me to legally have a stake in the house by acknowledging my initial contribution but not be on the mortgage initially. I think I thought that existed where people have invested in their friends/families properties to help them with a deposit/invest their money but not wanted to be on a mortgage as they wouldn't be living there/paying the mortgage.

I think a lot has changed due to money laundering checks as well. We gave our DC some money towards a flat & the solicitors had to know exactly where all the money had come from - we ended up giving them bank info stretching back several years. Back in the day when my dad helped me out, it was just that: here you are, here's some money, it's yours now!

The issue is if you have legal ownership of the house you have a claim to it that trumps that of the mortgage company. So if your partner defaults the bank can’t repossess. That’s why the bank won’t accept a co-owner who isn’t responsible for the debt.

By giving part of the purchase price you may gain co-ownership by default, particularly as the is not a parent/child relationship.

You need a conversation with your lawyer about how to make this work in a way that protects both your interests and the banks.