First Time Buyers

A question about : First Time Buyers

Hi all,

I am in the process of looking for a house to buy with my girlfriend. I've managed to save about Ј30k, whereas what she has saved is negligible.

I want to protect my deposit/share, and i'm aware that deed of trusts are a way to achieve this. There only appear to be two methods for separating the property ownership:

1. Agree that on sale the (assuming the house value does not drop) deposit is returned, e.g. 30k, remaining proceeds are split. Issue with this method is that any gains, which are made possible by the initial deposit, are split equally.

2. Ownership percentage proportions. E.g. 60%, 40%. I see a big flaw with this method though. For example, we immediately sell the house a year later, value is unchanged. Equity is 30k, the 30k is split 60/40, thus I would lose 12k.

Please correct any misconceptions i have made above, and advise on any better ways for achieving a fair split.

Thanks for your help,

Will.

Best answers:

• Method 1 seems fair. You assume the price will go up, it could go down.
  What is your fallback plan if the price falls and on sale she cannot cover her share of the mortgage with the sale proceeds? Sounds like you would be on the hook for it, make sure you realise this.
• Say you're going to purchase a property for Ј100k and you put in a deposit of Ј30k. Why don't you get 30% of the selling price (after selling fees have been deducted) and the rest of the money split 50/50 if you've each been paying half the mortgage?
  Your deed of trust should also include an exit strategy in case the relationship goes down the pooper. You don't want to end up like some posters who leave the property when the relationship ends and then 7 years later, after ignoring the issue, come on here asking for advice on how to force a sale.
• Having had an Uncle fall into this trap (twice) before and lose out .... on a lot of money, i strongly advise you to not have your girlfriend on the deeds or mortgage.
  I personally own my primary residence and although i have a girlfriend, i refused to let her be on the deeds or mortgage because just like you, although i am an optimist, i am also a realist and if this relationship were to collapse, i sure as hell won't be worrying about paying her off.
  If you can afford it, pay 100% of the mortgage yourself. split bills for things you both use 50/50 (gas, elec, water, food etc)
  The downside may be that your personal disposable cash every month is minimal but on the plus side you have protected your investment and your future.
  If like in my situation, your girlfriend ups her game, getsa better job, saves a lot more and can fork out for a future deposit, then you can both go in 50/50 and you won't ever feel hard done by if it were to break down.
  Hope that helps.
• If you love your 30k more than your girlfriend then why buy a house together?
  And if your considering the possibility of going your separate ways then why buy a house together?
• Why not just own it based on % put in
  So if its say a 150k house - assumed joint mortgage.
  you have put in Ј30k + 50% x 120k = 90k
  she has put in 50% x 120k = 60k
  Therefore, in this example you own it 60/40
  work the figures though, on whatever the cost is. seems a fair way to do it.
  if you sell in a year - with value unchanged you would get back your deposit - less your share of costs.
• Lots of couples buy together where one is contributing more to the deposit than the other - I'm buying a house with my partner at the moment and the majority of the deposit is being gifted to us by my parents, I would never see that as a reason not to buy together or not let my partner be on the mortgage. We're going with option 1 and getting a deed of trust drawn up to protect my share of the deposit. Any gains made possible after selling the house won't solely have been made possible by the deposit, but also by the money, time and effort you both put in to looking after the house once you live in it.
  Most couples will only be able to get the mortgage they need when their joint income is taken in to consideration so the OP buying on his own is probably a non-starter anyway.
  OP, I think this is something you really need to discuss with your partner because whatever you decide to do needs to be something you are both happy with.
• I would do it this way:
  1, deduct sales costs
  2, take your deposit back as a % of sale price after costs.
  3, give the bank the balance of the mortgage
  4, divide the remainder, half each (assuming you are paying half the mortgage each).
  For example buy a house 100k with 30% deposit, sell 120k (after sales costs). You take back 36k, outstanding mortgage is by then 60k, that leaves 24k to split 12k each.
  Also works if the value goes down: sell 80k after costs. You take back 24k of your deposit, the bank takes the other 56k, and you both have to pay off the balance of 2k.
• Hi all,
  Thanks for the responses, some good information.
  We have lived together for 2 years previously renting, and everything was fine.
  I also don't think its money grabbing to have a fall back plan, certainly when considering the amount of blood, sweat and tears that are required to save these sort of sums in today's world.
  It does appear that there is no single "best" way to do this.