Q My fiance and I plan to buy a house next year. I have a significantly larger deposit than he does. Mine currently stands at £10,000 but continues to grow, while he has £4,000.
We keep arguing about this. I don’t want to put down most of our deposit ( and effectively lose most of it . I’ve said we can set up some sort of repayment plan to ensure the house is a 50:50 split but he doesn’t seem to like this idea as he thinks he will have no money left after paying me, bills and the mortgage or that he will be paying back in small amounts for years and years.
If we wait for him to have saved as much as me, house prices will have rocketed – plus we want to start a family once we have a handle on the mortgage and we’d be too old by then.
What would be the best way to handle this? Uneven shares in the property and let him buy shares from me? Equal shares and he repays me a bit at a time? SD
A Trying to ensure the house is split 50:50 by setting up some kind of DIY repayment plan seems unnecessarily complicated and I’m also not sure how you would work out what he had to pay you.
If you definitely want to split ownership 50:50, an alternative approach could be to split payment of the mortgage unequally to reflect your different cash contributions. With a joint deposit of £14,000, you could buy somewhere for £140,000 with a 90% mortgage of £126,000. You could pay for your half share of £70,000 with your £10,000 in cash and by taking responsibility for paying for £60,000 of the mortgage. Your fiance would put in his £4,000 in cash but pay for £66,000 of the mortgage. Assuming an interest rate of 3.5% and a mortgage term of 25 years, for example, on a £126,000 mortgage, this would mean him paying £330 of the monthly mortgage repayment of £630 and you paying £300.
To work out the percentage of the monthly mortgage you each have to pay, you take the amount of the mortgage you are responsible for, divide it by the total mortgage and multiply by 100. If your mortgage payments change – as they will if interest rates go up or down – you simply multiply the new repayment amount by your percentage.
A simpler way of handling the disparity in the amount of cash you can each put towards the deposit on your house would be to own it in unequal shares and split the mortgage down the middle. Assuming a purchase price of £140,000, with you each taking on half the £126,000 mortgage, this would mean that you would own 52% of the property and your fiance 48% (both percentages rounded to the nearest whole number).
You would need to ask your solicitor to make sure that those percentages were shown at the Land Registry and it would also mean that you would need to be registered as tenants in common where you each own a distinct share of the property.
