Q My boyfriend is buying a house and making a cash contribution towards his purchase. The mortgage will be solely in his name as I already own another property (which I plan to keep and rent). The value of the property is £ 487,000 so I plan to contribute £ 48,700 plus £ 1,435 stamp duty in order to own a 10% share of the property. I want to pay for the mortgage with my partner every month. I queried this was fair as if we were to split I would only walk away with 10%. He wants to contribute £ 50,000, plus the remainder of the stamp duty and fees. He has two children and has been through a divorce and he has tried to protect himself. It bothers me that this arrangement is not the fairest way to work this out. Any advice would be much appreciated.
A I'm with you on the arrangement not being the fairest, because it is not. Paying 10% (because of that part of the monthly mortgage repayment goes to paying off the loan, thus increasing your equity). However, it can be considered as a "shared-ownership property". And maybe you should too if you doubt the fairness of it all – not least because such a lack of trust can not be great for your relationship. This might also make sense from a financial point of view. Because you already own a property which you do not want to sell, the stamp duty land tax (SDLT) due to the new property would be at the higher rate (ie standard rate plus 3%) so your 10% share of the total SDLT bill would have been £ 2,896 rather than £ 1,435. The higher rate of SDLT wants to apply if your boyfriend's erstwhile family home has not been sold. However, if any agreement on the family home with his ex-spouse has been made, he will be exempted from paying the higher rate of SDLT.
What does it mean, if you are not on the mortgage, or you want to be a joint owner of the property at the land registry. It is a rare – if not non-existent – it is prepared for a mortgage in a sole name. That's because there is one mortgage holder but two official owners, if the mortgage payer defaults, a lender can not take possession of the property while the other owner is not there get their money back. What is your cash contribution? In addition, if you and your boyfriend split up and / or the property is sold.