Buying a house with a partner

Pay-off Mortgage or Re-mortgage?

I bought a house four years ago and am planning to buy a house with partner next year and sell my house. The value of my house has increased by 60%. Should I clear my mortgage or remortgage in joint names?

Check out the Key Post on the topic.

It's vital that you specify what percentage of the house you will both own, especially if you are putting up most of the cash.

For example

Purchase price of the house: 400k

Owned 50/50 -

Cash supplied by Emily: 200k
Mortgage 200k

The mortgage would then be your partner's responsibility, although it would be in both your names.

Is your partner a first time buyer? He will lose his first time buyer status if you buy jointly. Won't matter so much if it's a new house, but could be expensive if it's a second hand house.

If you are planning to get married, maybe he should buy it in his sole name and transfer half of it to you when you get married. Check with your solicitor that this is genuine tax planning and not tax evasion.

Brendan

Personally speaking I think you'd be better off to clear your own Mortgage and start a fresh slate with your Partner in the new house, Mortgage in joint names. You should also consider getting an Agreement drawn up by your Solicitor stating what personal monies either of you are putting in to the property in the event that you should split up in the future.

If you are definitely selling your own house then the remaining mortgage gets cleared automatically at that time and your new mortgage should be in joint names.

If you were in a position to keep your own house, you could possibly rent it out , remortgage it and release some of the 60% increase in equity. You could then use those funds as a deposit on the new house. How you'd structure that arrangement would probably need legal advice in case of any future despute with your partner. You still end up with the same mortgage amount but part of it is secured against your house and part against the jointly owned house plus you get to keep the original house as an investment. Of course there are tax implications re the interest and the rent but its possibly an option worth considering.

upon sale of your property, the mortgage you have on the house has to be repaid from the proceeds of the sale anyway. did you mean not sell it and use it as equity by way of a joint remortgage to purchase a second property ? if so then your partner would be subject to gift tax as you would have to have her named on the property before you can remortgage it in joint names.
I think gift tax is 20% of the equity in the prop, so could be quite significant in your case.

Thanks for all of your replies. There are few things to think about. Renting the house would be an option, but the rental market in my area is not good at the moment - but things change I suppose. Selling the house is the preferred option. And the profit on the house is fairly significant so getting some legal advice is a very good idea as who knows what could happen in the future.