Buying together, different sized deposits

[movinghouse12]

I was wondering how people have bought properties together when you have an uneven deposit? We haven't been in this position previously and are not sure what people tend to do!

We have separate houses and are planning to buy one house together eventually. Imagine the deposit splits are something like:

Person A: 180k
Person B: 120k

How would you go about buying a house worth say £360k? Person A could have no mortgage and Person B have a £60k one to make their eventual share 50:50.

Or the mortgage could be joint but person A has their deposit ring fenced and a bigger % share of any equity (we are assuming it's possible for only one of you to have a mortgage on a joint house..?).

Just thinking out loud of ways to manage, as it could impact the price range of properties that we eventually look at. We are both quite risk averse and don't want huge mortgages, but are young enough we could a 25 year one.

Thanks to anyone who can share what they have done/what other options there are.

I’d just ring fence both deposits and then split it 50/50 if you are both going to be paying 50% of the bills after deposit.

That way if it all goes tits up you both get your deposit back and then 50% of anything else which is fair if both paying 50% of the mortgage after that.

One alternative might be to be Tenants in Common and own unequal shares of the house, and pay unequal shares of the mortgage. So Person A would own 60% of the property.

Advantage to this alternative: if Person A puts down 60% of the deposit, one could argue that it is only fair for them to get 60% of any appreciation in value, provided that they also pay 60% of the mortgage. Whereas, just ringfencing the deposit means that Person B receives 50% of the appreciation for paying 50% of the mortgage even though they only had to put in 40% of the initial capital.

Disadvantages to this alternative: it is more complicated and it might feel less equal while living there.

This all assumes Person A and Person B are not married to each other — if married then they each own 50% of everything anyway unless there is some sort of valid prenup.

This also sort of assumes that Person A and Person B have relatively similar earnings. If not, then one of them may face more strain from paying 50% or 60% of the mortgage.

I can see the merits for both PP’s suggestions. I think the first is less likely to cause arguments, but there’s also something to be said for compensating for the interest the 60K could have generated if invested.

Option three might be that both put 120K in (or whatever the lower deposit amount is), split everything evenly and the person with the extra 60K invests it.

I would suggest you go as a couple to a Solicitor and have a cohabitation agreement drawn up.

Personally on your position I’d say both put in an equal deposit and person A invest the £60k.

Deed of Trust via a solicitor

@movinghouse12 we bought as tenants in common, 75/25% deposit split and paying 25/75% of the mortgage. Trust deed explaining it all. 50 50 on other bills. As years went by, second person put in cash and then the mortgage contributions were readjusted as our financial situations changed.

edited due to typing 35 instead of 25