O
OhPinchy
Guest
My girlfriend and I are buying a house together and need to put a side agreement in place to ensure the extra €10,000 she is putting in is protected. We are both 24 and have been together for 3.5 years and plan on staying together, but we realise it would be naive not to put a side agreement in place, particularly since girlfriend is putting in all the up-front cash.
The cost price is €317,500 and we will be borrowing an extra €45,000 on the mortgage for renovations and an extension. Going rate of this work is €75,000, but due to my builder friend giving us everything at cost price, and me doing a large amount of the work, we will get it done for €45,000 and house will then be valued at €400,000.
Based on future earnings potential of my profession (currently €36,000) and girlfriend’s strong current earnings (€67,000), the bank will be giving us a 100% mortgage on the total amount of €362,500. Solicitors fees, structural survey, miscellaneous fees etc. comes to €2,500. We are budgeting for €7,500 for furniture and appliances. So total amount spent is €362,500 on mortgage plus €10,000 cash (which will all come from girlfriend) = €372,500.
On a 50:50 basis, we should each then be putting in €186,250 but what will actually be happening is girlfriend will be putting in €191,250 (i.e. 51.3%) while I will be putting in €181,250 (i.e. 48.7%). We have looked at the sample agreement on this site, and with a few adjustments, it would suit us were we doing a 50:50 split.
However, we are at a loss how to handle the fact that she is putting €10,000 more cash. I am quite happy to say that, in the event that we were to sell the house, she would get 51.3% of the proceeds, and I would get 48.7% - I reckon that this would be a good investment for her on her €10,000 as it is then indexed to the rise in the value of the house (which will immediately rise by €40,000 on completion of the work).
However, I would not be happy to hand over 51.3% of the decision making rights, as this would effectively give her 100% control and she could sell the house whenever she felt like it. We reckon that if one person wants to leave the other can buy them out (I would have to pay 51.3% of the valuation at the time), and if we break up, and both want to buy the other out, we draw lots to see who stays.
So, this was the best that we could come up with – she would get 51.3% of any future sale, while we both have an equal say in when/if that sale should happen. I know me paying back the €5,000 I owe her as a loan would be the simplest solution, but I won’t be in the position to do that for the first year or two, so any comments on this suggested approach, or alternative suggestions would be very much appreciated.
The cost price is €317,500 and we will be borrowing an extra €45,000 on the mortgage for renovations and an extension. Going rate of this work is €75,000, but due to my builder friend giving us everything at cost price, and me doing a large amount of the work, we will get it done for €45,000 and house will then be valued at €400,000.
Based on future earnings potential of my profession (currently €36,000) and girlfriend’s strong current earnings (€67,000), the bank will be giving us a 100% mortgage on the total amount of €362,500. Solicitors fees, structural survey, miscellaneous fees etc. comes to €2,500. We are budgeting for €7,500 for furniture and appliances. So total amount spent is €362,500 on mortgage plus €10,000 cash (which will all come from girlfriend) = €372,500.
On a 50:50 basis, we should each then be putting in €186,250 but what will actually be happening is girlfriend will be putting in €191,250 (i.e. 51.3%) while I will be putting in €181,250 (i.e. 48.7%). We have looked at the sample agreement on this site, and with a few adjustments, it would suit us were we doing a 50:50 split.
However, we are at a loss how to handle the fact that she is putting €10,000 more cash. I am quite happy to say that, in the event that we were to sell the house, she would get 51.3% of the proceeds, and I would get 48.7% - I reckon that this would be a good investment for her on her €10,000 as it is then indexed to the rise in the value of the house (which will immediately rise by €40,000 on completion of the work).
However, I would not be happy to hand over 51.3% of the decision making rights, as this would effectively give her 100% control and she could sell the house whenever she felt like it. We reckon that if one person wants to leave the other can buy them out (I would have to pay 51.3% of the valuation at the time), and if we break up, and both want to buy the other out, we draw lots to see who stays.
So, this was the best that we could come up with – she would get 51.3% of any future sale, while we both have an equal say in when/if that sale should happen. I know me paying back the €5,000 I owe her as a loan would be the simplest solution, but I won’t be in the position to do that for the first year or two, so any comments on this suggested approach, or alternative suggestions would be very much appreciated.