Couple buying house, one borrowing other with down payment

Hi,

We are looking for opinions on this scenario.

An unmarried couple are buying a house for 400000. Party (a) has 200000 upfront to pay for half of the house. This money is from inheritance and savings. Party (b) is paying 20000 upfront and borrowing the remaining 180000 from the bank to pay their half. Party (a) earns 30000 gross and party (b) earns 60000 gross.

The mortgage will be a joint mortgage but party (b) will be making the montly payments.

Both parties want to keep everything fair and equal however the question of interest has us both confused.

As party (b) is going to be borrowing to pay for their half is it up to that person to be solely paying the interest on the mortgage?

Also in the the event of break up what would be the fairest solution be to deviding everything up?

Hi Chun said:

Hi,

We are looking for opinions on this scenario.

An unmarried couple are buying a house for 400000. Party (a) has 200000 upfront to pay for half of the house. This money is from inheritance and savings. Party (b) is paying 20000 upfront and borrowing the remaining 180000 from the bank to pay their half. Party (a) earns 30000 gross and party (b) earns 60000 gross.

The mortgage will be a joint mortgage but party (b) will be making the montly payments.

Both parties want to keep everything fair and equal however the question of interest has us both confused.

As party (b) is going to be borrowing to pay for their half is it up to that person to be solely paying the interest on the mortgage?

Also in the the event of break up what would be the fairest solution be to deviding everything up?

Click to expand...

As you will need the services of a solicitor to purchase the property i think you should seek their advice on the issues you have raised.

Yes we are going to speak to a solicitor regarding the breaking up scenario.

However we would like opinions on the topic of the monthly interest as we not sure if a solicitor could help us decide what's the fairest solution.

Hi trojan

Most solicitors would not have an idea how to deal with this. They would just do a simple conveyance and not worry too much about anything else.

Hi Hi Chun

First of all, both of you must read at least twenty threads in this forum before proceeding:

Issues arising from joint mortgages

If you still want to proceed after this...

A owns half of the house and makes no repayments whatsoever on the mortgage. B is totally responsible for the mortgage payments.

When the house is eventually sold, A gets exactly half the proceeds. B gets the other half, less the outstanding mortgage.

You need to do an agreement which assumes that things go wrong.

Either party has the right to sell the house on giving three months notice.
If either party wants to buy out the other party's interest, then the house should be valued by an independent valuer. Name that firm of valuers now so that you don't fight over which valuer is appointed.
Identify a person now who will act as arbiter in the event of a dispute - perhaps your solicitor?

Having reached an agreement, now consult your solicitor

Check to see if it's possible for A's name to be on the deeds without being on the mortgage. That means that A's ICB record would not be damaged by B's defaulting on the mortgage. I don't think it is, but I don't know.

Agree a procedure in the event of default by B. I would suggest the following.

A& B open a joint account from which the mortgage is paid.
B pays into that account.
If B does not pay enough into the account, A can pay into it to make sure that no arrears arise.
A charges B interest at ECB + 5% on any payments which A makes into the account to avoid arrears.

In the event of the sale of the house, A would get their 50% and would have any loan to B repaid from the proceeds.

You will find more ideas in this thread:

Buying a house with a friend - draft agreement

Brendan

Thanks for the advice Brendan.

Brendan Burgess said:

Hi trojan

Most solicitors would not have an idea how to deal with this. They would just do a simple conveyance and not worry too much about anything else.

Hi Hi Chun

First of all, both of you must read at least twenty threads in this forum before proceeding:

Issues arising from joint mortgages

If you still want to proceed after this...

A owns half of the house and makes no repayments whatsoever on the mortgage. B is totally responsible for the mortgage payments.

When the house is eventually sold, A gets exactly half the proceeds. B gets the other half, less the outstanding mortgage.

You need to do an agreement which assumes that things go wrong.

Either party has the right to sell the house on giving three months notice.
If either party wants to buy out the other party's interest, then the house should be valued by an independent valuer. Name that firm of valuers now so that you don't fight over which valuer is appointed.
Identify a person now who will act as arbiter in the event of a dispute - perhaps your solicitor?

Having reached an agreement, now consult your solicitor

Check to see if it's possible for A's name to be on the deeds without being on the mortgage. That means that A's ICB record would not be damaged by B's defaulting on the mortgage. I don't think it is, but I don't know.

Agree a procedure in the event of default by B. I would suggest the following.

A& B open a joint account from which the mortgage is paid.
B pays into that account.
If B does not pay enough into the account, A can pay into it to make sure that no arrears arise.
A charges B interest at ECB + 5% on any payments which A makes into the account to avoid arrears.

In the event of the sale of the house, A would get their 50% and would have any loan to B repaid from the proceeds.

You will find more ideas in this thread:

Buying a house with a friend - draft agreement

Brendan

Click to expand...

Brendan Burgess said:

Hi trojan

Most solicitors would not have an idea how to deal with this. They would just do a simple conveyance and not worry too much about anything else.

Hi Hi Chun

First of all, both of you must read at least twenty threads in this forum before proceeding:

Issues arising from joint mortgages

If you still want to proceed after this...

A owns half of the house and makes no repayments whatsoever on the mortgage. B is totally responsible for the mortgage payments.

When the house is eventually sold, A gets exactly half the proceeds. B gets the other half, less the outstanding mortgage.

You need to do an agreement which assumes that things go wrong.

Either party has the right to sell the house on giving three months notice.
If either party wants to buy out the other party's interest, then the house should be valued by an independent valuer. Name that firm of valuers now so that you don't fight over which valuer is appointed.
Identify a person now who will act as arbiter in the event of a dispute - perhaps your solicitor?

Having reached an agreement, now consult your solicitor

Check to see if it's possible for A's name to be on the deeds without being on the mortgage. That means that A's ICB record would not be damaged by B's defaulting on the mortgage. I don't think it is, but I don't know.

Agree a procedure in the event of default by B. I would suggest the following.

A& B open a joint account from which the mortgage is paid.
B pays into that account.
If B does not pay enough into the account, A can pay into it to make sure that no arrears arise.
A charges B interest at ECB + 5% on any payments which A makes into the account to avoid arrears.

In the event of the sale of the house, A would get their 50% and would have any loan to B repaid from the proceeds.

You will find more ideas in this thread:

Buying a house with a friend - draft agreement

Brendan

Click to expand...