How can my daughter protect her interests if she adds her boyfriend to the mortgage and deeds?

Posted on 20 August 2013 by Helen


My daughter, on her own, recently bought her first house for £114000 with a £23000 deposit (inheritence and gift from me) and £91000 mortgage, fixed for 4 years. She spent a further £30000  renovating it which brings it up to market value of £145000.  She will be moving in soon and her longterm boyfriend will be moving in as well now.  At the time of purchase, her boyfriend was travelling, was not in a position to put a deposit down or apply for a mortgage and uncertain to where he would be in the world, but now has a well paid permanent job locally. He will make a contribution to the household finances with bills etc and 'rent'. 
There is an option to have his name put on the mortgage, but my daughter would want to wait a few months before doing so. She has been advised to set up a tenancy agreement which excludes him from any interest in the property. However, he doesn't want to pay 'rent' for perhaps 3 years, the relationship to break up and for him not to have any 'equity' to use as a deposit for himself - a position she is sympathetic to. How does she protect her interests in the property, whilst being 'fair' to her boyfriend? Thanks

Helen,

This is an issue that crops up frequently and is an area that many people don't gice a moments thought to when they're buying a property and one party is putting in a significantly higher amount than the other.

The kind of tenancy that I think has been mentioned is to do with the ownership of the property. Typically when two people buy a property they do so under 'Joint Tenants' which means that each party basically owns half the property, and in the event of them selling if the relationship fails, means each would get 50% of any equity.

The second way to own a property is via 'Tenants in Common' whereby each party owns a specific share. So if your daughter added her boyfriend to the mortgage and deeds, although they would both be equally liable for the monthly payment, they could set the actual ownerwhip up as say 80/20 in her favour. This would effectively protect her equity and investment in the property in the event that they should ever go their separate ways in the future.

Your solicitor will be able to explain in more detail exactly how this works.

Regards,

Alistair

contact@johncharcol.co.uk

More than mortgages, talk to me about:
Financial Protection | Investments | Personal and Corporate Pensions | Home Insurance
General Insurance | Valuations | Conveyancing | Wills | Home finders

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.