Cohabitation agreement and transfer of a mortgage and home ownership

R

ryan66

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Hi all,

I'm currently applying for a mortgage with my girlfriend, not because we are planning to spend the whole life together, but because I can't get enough mortgage on my own. The idea is that in reality I will repay the entire mortgage and the entire house would be mine as well.

Now, how to do it so everything is fine from a legal point of view? My mortgage advisor told me that after we buy a property both mortgage and house are owned by both of us 50:50. Should we prepare cohabitation agreement assuming both get transferred to me straight after we move into the house and then in the even of breaking up execute it? Does anyone have any experience with a similar situation and know what costs/taxes will be involved? I want to be prepared for that rather than get suprised by how complicity of such operation.

Regards,
Ryan
 
RichInSpirit said:
Do you not love her?
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Hahahhaha, thats not the first answer I expected :D I do love her, but I think people should always think in advance and be prepared for the worst case scenario. Not enough people do it and later there are many problems. She is completely fine with this idea and also would like not to have obligations remaining as that mortgage after we split up.
 
ryan66 said:
after we split up.
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When do you plan to do this? I would be advising the temporary girlfriend not to jointly apply for a mortgage with you. She would be liable for the debt if anything went wrong - such as you loosing your job. And given your acknowledgement of the temporary arrangement of your partnership I would wonder if you only have a girlfriend for your own financial purposes and advise her to move on from the relationship as well.

I think you need to rethink your plan. Perhaps ask her to rent a room to boost your income so you can have a better chance of getting a mortgage in your own name.
 
Okay, I think I expressed myself not very clearly. It's not like 'I'm using her' only for my financial purpose or she is my 'temporary girlfriend', we have been together for 6 years but her financial capablities are way lower than mine - she earns half of what I do and I provide the entire deposit. I would appraciate some answers on basis of merit. We both find this agreement to be beneficial and its more about a legal perspective than opinions on whether we should do it or not.
 
A few issues that will make this a unworkable plan,

If you jointly own the house and she gives you half of it, it is a gift subject to CAT (dwelling house exemption may apply, not sure of the details)
If you have a joint mortgage, the deeds of the house will be held by the bank, and if she legally transfers half of it to you, they may object and insist that you get a mortgage on your own
 
If the bank won't give you the size mortgage you want on your own income only and you need hers to get it then you can be sure they won't take her name off it either straight after you move in if that is your plan. The bank won't take her name off the mortgage until your income is sufficient for you to get that amount on your own.

Plus and it's maybe not a major thing but it's not like you are both 50/50 responsible for mortgage, you are actually both 100% responsible for the mortgage so if you didn't pay she's on the hook for the full 100% not 50%
 
Even if you are paying the mortgage there are things that she will have to take into account before she agrees that you get everything if things go awry.
1. She will lose her first time buyer status so is not eligible for things like help to buy should she need to in the future.
2. If something happens like you lose your job or have ill health and can't work, she is responsible for the mortgage just as much as you are and the bank will expect her to pay.
3. If you split up and let's say the property has devalued or the bank won't give you the mortgage on your own to pay off the joint mortgage, she will be tied into the mortgage while probably paying rent elsewhere which would prevent her from buying a house or getting rent assistance or local authority housing etc.
4. She will inevitably end up putting some money into the house in the form of furnishings or fixtures. Unless you are literally going to pay for and do absolutely everything house, furniture, maintenance related etc. she will be contributing.
5. If you have a child together before you get married your agreement goes out the window because it then becomes the family home.

In my opinion she would be crazy to get into a mortgage while agreeing not to have an interest in the house. She's taking on all the responsibility with none of the benefits.
 
I think you should first both grow up and have a mature conversation about whether you are committed to spending the rest of your lives together.

If you’ve agreed on that then think about buying the house and remember that there is no “my money” and “your money” anymore.
 
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I would not buy a house with someone I did not 100% intend to marry and set up home with. The risks are just too high for both of you. If you are not there, then combining resources at this stage is not appropriate given how difficult it is to unwind. If your financial behaviours and goals are very different now they are unlikely to significantly change in the future so just be aware of that.

Is there any other way you can finance your home? Eg gift from parents to increase deposit, will your salary increase in short term (eg if on a training programme), take on additional work at weekends etc.
 
What about voluntary deed of transfer? Isn't it a tax exemption between Civil Partners?
I know that transfering an entire mortgage to one person may not be perfect for the bank but for sure we are not gonna break up in like 3 months but after some of it is repayed and I expect to increase my income all the time, so thats another factor that should make it easier maybe
 
ryan66 said:
She is completely fine with this idea and also would like not to have obligations remaining as that mortgage after we split up.
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Your girlfriend may agree now but that is probably coming from a position of being uninformed. She gets all the downside if you are to break up as @McStuffins has already pointed out and there are many more reasons for her not to do it

ryan66 said:
We both find this agreement to be beneficial and its more about a legal perspective than opinions on whether we should do it or not
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If you were to do anything at all along the lines of what you describe then you should both be getting independent legal advice, i.e. you can't use the same solicitor.

If you do this, I would be amazed if any solicitor would allow her to sign anything of the sort. Either find a cheaper property or find another way to finance it.
 
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