Girlfriend wishes to contribute to my mortgage

[dowie]

As said, he also has paid £45k (+ compounded interest) less on the mortgage with which he can do other things.

In my view, ongoing mortgage payments (+ upkeep + improvement payment) would also be split the same as the equity so any gains or losses are split exactly the same way.

It's not particularly difficult to make it an equitable arrangement.

They don't need to pay off the mortgage to buy a new house though (or to break up, which is the issue really of concern as the equity split in the forever home is irrelevant if they stay together) so essentially if there are significant gains then he's giving some of them away.

As an extreme example to demonstrate this in principle, suppose just after signing it and taking her 45k the house becomes worth £200k more (the government announces some new infrastructure scheme or some developer wants it and the neighbours houses). If he hadn't taken the 45k that 200k gain is all the OP's, if he does then he gets 160k and he owes his gf 40k.

Obvs that's a very lucky scenario to occur, but the basic point is that if the house were to gain in value then the OP is giving away a portion of those gains, whereas if it doesn't gain much in value then he's just acting like a sort of savings account and she might as well just keep the money in an ISA, high-interest savings, gilts (the low interest/high yield ones are useful as GCT exempt) etc..

 

[413x]

I completely disagree. If you are in a relationship where you can't have adult conversations about money & risk then you are doomed to fail.
All kids should be bought up with realistic expectations and an understanding of household finances.

Ref the OP:
Going to a solicitor is the right approach. You can do a deed of trust where you outline who contributed what and who will get what on a sale.

Things to consider in the 'who gets what' are future mortgage payment split & crucially any change in equity due to house prices going up or down (how do you benchmark.. because if purchase price then she benefits from increased value over your ownership so you may want to base it on current market value).

You also need to check on how enforceable they actually are, and write in safeguards on timescales for you to find the equity to pay her back (eg if securing a bigger mortgage was required it may take time).

Finally consider splits of furnishings, upkeep and improvements (split by equity % or income or 50/50?)


Don't listen to the naysayers, it can be a practical approach that you both benefit from if you do it right and go in with your eyes open.

Totally agree with that first part.
Money doesn't have to get in the way of emotions and love. I don't accept you should share things 50:50 if you are in a relationship and you're a terrible person if you don't.
Because life is real, and you wouldn't expect your partner to break up with you, just same as you wouldn't expect them to "maybe" shaft you.

Making it all clear at the start isn't some cold "it's destined to fail" precedent. I actually think it's the opposite. If a conversation started with working out finances turned to some slagging match on "then this relationship is doomed".. "you don't really love me"... Then that's a relationship I don't want to be a part of. The other person (in my mind) would be irrational and to idealistic /dramatic for me

 

[Kamakazie!]

They don't need to pay off the mortgage to buy a new house though (or to break up, which is the issue really of concern as the equity split in the forever home is irrelevant if they stay together) so essentially if there are significant gains then he's giving some of them away.

As an extreme example to demonstrate this in principle, suppose just after signing it and taking her 45k the house becomes worth £200k more (the government announces some new infrastructure scheme or some developer wants it and the neighbours houses). If he hadn't taken the 45k that 200k gain is all the OP's, if he does then he gets 160k and he owes his gf 40k.

Obvs that's a very lucky scenario to occur, but the basic point is that if the house were to gain in value then the OP is giving away a portion of those gains, whereas if it doesn't gain much in value then he's just acting like a sort of savings account and she might as well just keep the money in an ISA, high-interest savings, gilts (the low interest/high yield ones are useful as GCT exempt) etc..

And if it drops 200k he's better off. It's risk reward as all investments and as I said can be made perfectly equitable.
If he wants to, the op can stick it all on red and double his money tomorrow.

 

[Kamakazie!]

We have adult conversations about money. Everything is split down the middle 50:50. Even though I earn more I am happy with that. I am here to provide for my family and children. Might be old fashioned but that is how I see things. Perhaps why after 16 years we are both still happily together. It works for us anyway.

So you have adult conversations but if you breakup and it's anything less than amicable then one of you is getting shafted.

If your daughter has a big deposit through whatever means, I hope she has the sense to secure that legally if buying with someone else.

 

[sigma]

We have adult conversations about money. Everything is split down the middle 50:50. Even though I earn more I am happy with that.

Why wouldn't you be happy with that? If you earn more then she's paying more as a % of her income. Why would you be sad about this, if anyone would be then it would be her.

 

[dowie]

And if it drops 200k he's better off. It's risk reward as all investments and as I said can be made perfectly equitable.
If he wants to, the op can stick it all on red and double his money tomorrow.

Yup of course, but that's what he needs to be clear about here, he's handing over some of the risk to his gf and with an agreement to pay her off. It's less of an issue if it drops and they split up as he doesn't need to pay as much.

In the case where it rises in value significantly OP is hoping to keep his home and pay back gf in the event of a split, will he have sufficient cash to do that if he owes her a significant return or would a split then force a sale.

Either way, they need to agree in advance how they're valuing it and how they'll value it in the future in the event of a split/dispute. Is she going to be happy and accept she only gets 40k back in the event they break up, even after contributing overpayments, as the value of the house has dropped at that point in time?

Ultimately by selling a chunk to her at this point in time he's taking a bearish view and giving up some of his potential future returns and she's taking a bullish view, hoping to gain some returns at his expense, anything she gains (in terms of capital gains) from this is coming from what would otherwise be gains made by the OP.

 

[christmascake]

Hello. Girlfriend in question here. I wanted to add in my point of view into this thread.


1. I do not want children, and can't quite explain how strongly I feel about this. I'm not maternal in the slightest, and I truly cannot see this ever changing. I have 3 nieces that I love, but that is about it. This being said, it is solid advice to OP that when he/we discuss with a solicitor, we take this into account incase circumstances change in the future.

2. I do not want to get married. Again, something people seem to have missed on this post. I struggle to understand the points of 'careful, she's trying to steal half of your house, so to solve this problem you should get married'. Well - I do not want to steal OP's house, but if I did, getting married and then shortly divorced would be a sure way to get this done, right?

3. I almost had a house deposit saved when I met OP, 3 years ago. (I was around £3k short - still saving at the time). My plan always was to buy my own house, but when OP had his house and we saw a future together, it no longer made sense for me to buy my own, have a mortgage each, and then not be able to afford to move in together / have two houses to sell if we bought one jointly. We made the joint decision for me to move in to OP's home, and form a cohabitation agreement to protect OP's property against any risk - should the relationship not work.

4. My motivations - we see a future together, why wouldn't we jointly pay the mortgage, be debt free in <5 years, and then start saving cash? OP would be mortgage free by 40, myself by 30, and start investing at this point. Most financial advisors would say pay debts first before investing. The difference of 1-2% in a high interest savings account isn't worth being in debt for triple the time you need to be. Yes, overpayment fees will apply, but we'll be saving circa. £50k in interest on the mortgage. The overpayment fees are pennies in comparison. I also want to invest in something myself - I entertained a BTL, but the tax/hassle made me deem it not suitable. I entertained a high interest savings account - but I struggle to justify saving when OP has a mortgage, which we could clear in less than 1/4 of the time, if I started contributing.

5. The point of the original post was not to ask if OP should trust me, it was to ask what else he needs to do to protect himself IF the relationship did not work. As mentioned by OP, we both have a lot of cash at risk and want to ensure that IF anything were to happen with the relationship, neither one of us gets shafted. Everything commenters have mentioned (about risk to OP's house if I start paying) is the exact reason we are going to a solicitor - to make sure this cannot happen, under any circumstances. I'm not overly bothered if I ultimately do not start paying into the mortgage - if OP decides against this, I would understand, and look into other investment opportunities. I just think it makes sense to join together on it and get debt cleared sooner rather than later.


Finally - in case it is not clear - I AGREE THAT OP NEEDS TO PROTECT HIS ASSETS and have heavily encouraged this from the start. I also need to protect my £45k + future payments to a mortgage that ultimately, is not mine.

 

[Kamakazie!]

Yup of course, but that's what he needs to be clear about here, he's handing over some of the risk to his gf and with an agreement to pay her off. It's less of an issue if it drops and they split up as he doesn't need to pay as much.

In the case where it rises in value significantly OP is hoping to keep his home and pay back gf in the event of a split, will he have sufficient cash to do that if he owes her a significant return or would a split then force a sale.

Either way, they need to agree in advance how they're valuing it and how they'll value it in the future in the event of a split/dispute. Is she going to be happy and accept she only gets 40k back in the event they break up, even after contributing overpayments, as the value of the house has dropped at that point in time?

Ultimately by selling a chunk to her at this point in time he's taking a bearish view and giving up some of his potential future returns and she's taking a bullish view, hoping to gain some returns at his expense, anything she gains (in terms of capital gains) from this is coming from what would otherwise be gains made by the OP.

Of course, and I outlined the need to value future contributions.
If the value goes down it will not do so in isolation so if she gets 10% less back she will be buying back into a similarly depreciated market.

On the flip side for her, why should she miss out on future capital gains just because he already has a property?
If she has to get a BTL she would lose out massively on mortgage rates, risk etc unless all this was also split which is potentially a bigger headache as it won't be a primary property for capital gains etc.

 

[dowie]

On the flip side for her, why should she miss out on future capital gains just because he already has a property?

Well, why should he miss out on them? If they both believe that capital gains are to be made here then he's essentially giving her money he'd otherwise be anticipating to make.

If she has to get a BTL she would lose out massively on mortgage rates, risk etc unless all this was also split which is potentially a bigger headache as it won't be a primary property for capital gains etc.

She doesn't have to get anything. This may be attractive to her in part because the OP is giving up something of value, inc the locked-in loan which wouldn't be available now. He might as well give her some cash.

I think it's all a bit pointless and overcomplicating things for the OP and his gf and property values aren't likely to go anywhere and she might as well stick her cash in savings, an ISA, gilts etc.. or some in an index fund. Especially if there is currently a locked-in, lower interest-rate mortgage on the property, it's pointless to overpay that.

I suspect it's probably more some emotional/irrational thing relating to wanting to be able to say she has a stake in a property even though she's not actually going to have it in her name and is perhaps going to just result in treating OP like a savings account while opening up all sorts of potential complications and arguments for the future.

If she really, really wants to have some exposure to property then she can invest in a REIT, some of these are leveraged too.

 

[Minstadave]

Hello. Girlfriend in question here. I wanted to add in my point of view into this thread.


1. I do not want children, and can't quite explain how strongly I feel about this. I'm not maternal in the slightest, and I truly cannot see this ever changing. I have 3 nieces that I love, but that is about it. This being said, it is solid advice to OP that when he/we discuss with a solicitor, we take this into account incase circumstances change in the future.

2. I do not want to get married. Again, something people seem to have missed on this post. I struggle to understand the points of 'careful, she's trying to steal half of your house, so to solve this problem you should get married'. Well - I do not want to steal OP's house, but if I did, getting married and then shortly divorced would be a sure way to get this done, right?

3. I almost had a house deposit saved when I met OP, 3 years ago. (I was around £3k short - still saving at the time). My plan always was to buy my own house, but when OP had his house and we saw a future together, it no longer made sense for me to buy my own, have a mortgage each, and then not be able to afford to move in together / have two houses to sell if we bought one jointly. We made the joint decision for me to move in to OP's home, and form a cohabitation agreement to protect OP's property against any risk - should the relationship not work.

4. My motivations - we see a future together, why wouldn't we jointly pay the mortgage, be debt free in <5 years, and then start saving cash? OP would be mortgage free by 40, myself by 30, and start investing at this point. Most financial advisors would say pay debts first before investing. The difference of 1-2% in a high interest savings account isn't worth being in debt for triple the time you need to be. Yes, overpayment fees will apply, but we'll be saving circa. £50k in interest on the mortgage. The overpayment fees are pennies in comparison. I also want to invest in something myself - I entertained a BTL, but the tax/hassle made me deem it not suitable. I entertained a high interest savings account - but I struggle to justify saving when OP has a mortgage, which we could clear in less than 1/4 of the time, if I started contributing.

5. The point of the original post was not to ask if OP should trust me, it was to ask what else he needs to do to protect himself IF the relationship did not work. As mentioned by OP, we both have a lot of cash at risk and want to ensure that IF anything were to happen with the relationship, neither one of us gets shafted. Everything commenters have mentioned (about risk to OP's house if I start paying) is the exact reason we are going to a solicitor - to make sure this cannot happen, under any circumstances. I'm not overly bothered if I ultimately do not start paying into the mortgage - if OP decides against this, I would understand, and look into other investment opportunities. I just think it makes sense to join together on it and get debt cleared sooner rather than later.


Finally - in case it is not clear - I AGREE THAT OP NEEDS TO PROTECT HIS ASSETS and have heavily encouraged this from the start. I also need to protect my £45k + future payments to a mortgage that ultimately, is not mine.

Welcome! Was hoping for this turning into an epic OcUK classic but sadly you've come in with sensible and measured reasoning.

 

[Maccy]

Hello. Girlfriend in question here. I wanted to add in my point of view into this thread.


1. I do not want children, and can't quite explain how strongly I feel about this. I'm not maternal in the slightest, and I truly cannot see this ever changing. I have 3 nieces that I love, but that is about it. This being said, it is solid advice to OP that when he/we discuss with a solicitor, we take this into account incase circumstances change in the future.

2. I do not want to get married. Again, something people seem to have missed on this post. I struggle to understand the points of 'careful, she's trying to steal half of your house, so to solve this problem you should get married'. Well - I do not want to steal OP's house, but if I did, getting married and then shortly divorced would be a sure way to get this done, right?

3. I almost had a house deposit saved when I met OP, 3 years ago. (I was around £3k short - still saving at the time). My plan always was to buy my own house, but when OP had his house and we saw a future together, it no longer made sense for me to buy my own, have a mortgage each, and then not be able to afford to move in together / have two houses to sell if we bought one jointly. We made the joint decision for me to move in to OP's home, and form a cohabitation agreement to protect OP's property against any risk - should the relationship not work.

4. My motivations - we see a future together, why wouldn't we jointly pay the mortgage, be debt free in <5 years, and then start saving cash? OP would be mortgage free by 40, myself by 30, and start investing at this point. Most financial advisors would say pay debts first before investing. The difference of 1-2% in a high interest savings account isn't worth being in debt for triple the time you need to be. Yes, overpayment fees will apply, but we'll be saving circa. £50k in interest on the mortgage. The overpayment fees are pennies in comparison. I also want to invest in something myself - I entertained a BTL, but the tax/hassle made me deem it not suitable. I entertained a high interest savings account - but I struggle to justify saving when OP has a mortgage, which we could clear in less than 1/4 of the time, if I started contributing.

5. The point of the original post was not to ask if OP should trust me, it was to ask what else he needs to do to protect himself IF the relationship did not work. As mentioned by OP, we both have a lot of cash at risk and want to ensure that IF anything were to happen with the relationship, neither one of us gets shafted. Everything commenters have mentioned (about risk to OP's house if I start paying) is the exact reason we are going to a solicitor - to make sure this cannot happen, under any circumstances. I'm not overly bothered if I ultimately do not start paying into the mortgage - if OP decides against this, I would understand, and look into other investment opportunities. I just think it makes sense to join together on it and get debt cleared sooner rather than later.


Finally - in case it is not clear - I AGREE THAT OP NEEDS TO PROTECT HIS ASSETS and have heavily encouraged this from the start. I also need to protect my £45k + future payments to a mortgage that ultimately, is not mine.

Interesting IP match

 

[Minstadave]

Interesting IP match

Mags made another alt?

 

[adam cool dude]

So you have adult conversations but if you breakup and it's anything less than amicable then one of you is getting shafted.

If your daughter has a big deposit through whatever means, I hope she has the sense to secure that legally if buying with someone else.

Does it ever occur to you that the money side of things doesn't bother me in the slightest? If we were to split up which I very much doubt will happen what ever I would get would be what I get. My missus is of the same ethos. We have spent almost half our lives together.

I know it might sound strange but I'd rather my children have everything financially and I go without.

 

[christmascake]

Interesting IP match

We live together. It should match?

 

[Diddums]

My finances are quite simple tbh, she spends all the money, I get clean underwear. Winner winner.

 

[ivrytwr3]

Hello. Girlfriend in question here. I wanted to add in my point of view into this thread.


1. I do not want children, and can't quite explain how strongly I feel about this. I'm not maternal in the slightest, and I truly cannot see this ever changing. I have 3 nieces that I love, but that is about it. This being said, it is solid advice to OP that when he/we discuss with a solicitor, we take this into account incase circumstances change in the future.

2. I do not want to get married. Again, something people seem to have missed on this post. I struggle to understand the points of 'careful, she's trying to steal half of your house, so to solve this problem you should get married'. Well - I do not want to steal OP's house, but if I did, getting married and then shortly divorced would be a sure way to get this done, right?

3. I almost had a house deposit saved when I met OP, 3 years ago. (I was around £3k short - still saving at the time). My plan always was to buy my own house, but when OP had his house and we saw a future together, it no longer made sense for me to buy my own, have a mortgage each, and then not be able to afford to move in together / have two houses to sell if we bought one jointly. We made the joint decision for me to move in to OP's home, and form a cohabitation agreement to protect OP's property against any risk - should the relationship not work.

4. My motivations - we see a future together, why wouldn't we jointly pay the mortgage, be debt free in <5 years, and then start saving cash? OP would be mortgage free by 40, myself by 30, and start investing at this point. Most financial advisors would say pay debts first before investing. The difference of 1-2% in a high interest savings account isn't worth being in debt for triple the time you need to be. Yes, overpayment fees will apply, but we'll be saving circa. £50k in interest on the mortgage. The overpayment fees are pennies in comparison. I also want to invest in something myself - I entertained a BTL, but the tax/hassle made me deem it not suitable. I entertained a high interest savings account - but I struggle to justify saving when OP has a mortgage, which we could clear in less than 1/4 of the time, if I started contributing.

5. The point of the original post was not to ask if OP should trust me, it was to ask what else he needs to do to protect himself IF the relationship did not work. As mentioned by OP, we both have a lot of cash at risk and want to ensure that IF anything were to happen with the relationship, neither one of us gets shafted. Everything commenters have mentioned (about risk to OP's house if I start paying) is the exact reason we are going to a solicitor - to make sure this cannot happen, under any circumstances. I'm not overly bothered if I ultimately do not start paying into the mortgage - if OP decides against this, I would understand, and look into other investment opportunities. I just think it makes sense to join together on it and get debt cleared sooner rather than later.


Finally - in case it is not clear - I AGREE THAT OP NEEDS TO PROTECT HIS ASSETS and have heavily encouraged this from the start. I also need to protect my £45k + future payments to a mortgage that ultimately, is not mine.

That's us told - fair play to the GF

 

[ivrytwr3]

We live together. It should match?

Ah, but do you own the house?

(we know the IPs match - it's a geek forum, so was said with a hint of sarcasm, nothing malicious).

 

[ivrytwr3]

My finances are quite simple tbh, she spends all the money, I get clean underwear. Winner winner.

Same here.

 

[christmascake]

Ah, but do you own the house?

(we know the IPs match - it's a geek forum, so was said with a hint of sarcasm, nothing malicious).

I don't own the house - but according to everyone on here, I want half of it!

 

[tamzzy]

Most financial advisors would say pay debts first before investing. The difference of 1-2% in a high interest savings account isn't worth being in debt for triple the time you need to be. Yes, overpayment fees will apply, but we'll be saving circa. £50k in interest on the mortgage. The overpayment fees are pennies in comparison. I also want to invest in something myself - I entertained a BTL, but the tax/hassle made me deem it not suitable. I entertained a high interest savings account - but I struggle to justify saving when OP has a mortgage, which we could clear in less than 1/4 of the time, if I started contributing.

yes and no. only if the debt % interest is higher than the savings/investing % interest.
at the moment, if @OpenToSuggestions has a low % mortgage (which i assume he does), it is probably better to save that £45k than to overpay the mortgage.

see:

Mortgage Overpayment Calculator: Pay off your debt early?...

Mortgage Overpayment Calculator shows how much you can save by paying off your mortgage early - if your mortgage allows overpayments.

www.moneysavingexpert.com

plug in the numbers as you see fit, eg: