Unmarried - How could this affect a self-build mortgage?

TrixIrl · 10-10-2016 03:11PM #1

Hi All,

Thanks in advance for any replies.

Situation as follows - partner has been gifted a site which we are currently applying for planning permission for. As this was gifted from his parents, it was put into his name solely to reap the tax benefits of family land transfers.

I am in a permanent position in the public service; he is a teacher on various temporary contracts from different schools. There is no reasonable hope of a permanent contract for him in the next 4-5 years at least due to the subjects he teaches.

I can afford a sufficient mortgage & costs on my own salary; however the site & planning are in his name. We are not married and to be honest I don't think I could justify money on a wedding until we have our home built!

Will I have to include him as an applicant? Will he have to sell me the site? Has anyone been in a similar situation? It seems to be a bit of a catch-22 as he is has site + pp but no mortgage approval and vice versa.... Thanks everyone.

phormium · 10-10-2016 05:33PM

If you go ahead and apply for a mortgage on your own then when it comes to doing the legal work for the deeds of house etc the site will have to be transferred into your name. No way around that unless you put him on mortgage too then when the house will be in joint names, could still be tax situation as you will still be getting half of it. You need to take advice from a professional on the tax side but you can't apply for a mortgage on your own and leave the site in his name, well you can apply and get approval but you won't be able to draw down funds until the legal title to the house is sorted to bank's satisfaction. It won't have to done beforehand as such but your solicitor will be required to give an undertaking to the bank before you draw down that they will provide proper title.

bee06 · 10-10-2016 06:15PM

This is what we did when we were building ... site was in my name. We got a joint mortgage but the title deeds were in my name only. Our mortgage broker told us AIB are the only bank who will do this. He get independent legal advice and sign a letter to say he understood he was liable for the mortgage but didn't have claim to the house. We were getting married in a few months anyway.

Trish56 · 11-10-2016 08:23AM

Bee06 is correct. You can have two on the mortgage & one on title which will be your partner. Haven which is the Broker arm of Haven do this as do AIB & not sure of EBS but they are also owned by AIB. He will have to go on the mortgage though & in order to qualify they may take a small amount of his income into consideration despite the fact he is only on contract. He will need to provide details of his earnings for past 3 years. You need to determine how much of the mortgage your earnings will cover. Have you plans drawn up ? What is the sq footage of the self build, are you building by direct labour or fixed price contract with a builder. Do you have a deposit/savings other than site as you will have to prove affordability & repayment capacity. You need to show evidence that you have been paying the equivalent of stressed repayments either in rent or savings over the last 6 months. After stressed repayments as a couple you need to have 2050 left over every month.
My advice would be to go to a good broker & there are plenty around the country who don't charge fees.
Hope the above helps.
Trish

Right2Write · 11-10-2016 08:46AM

You could get married in the local registry office to deal with the paperwork. And then have a family do in a couple of years when things settle down. If you have doubts over the marriage then maybe you should have doubts over the financial commitments you're making? It is after all partly why marriage as an institution exists - to protect the interests of both partners and any children deriving thereof.

Peregrinus · 11-10-2016 09:08AM

Talk to a lawyer, definitely.

Leave aside the mortgage for a moment. If you spend money building a house on land that he owns, that house belongs to him. All you have done, from a legal point of view, is spend your money improving property which he owns, which is generous of you.

This doesn't change if you later marry. When you marry, you don't automatically acquire joint ownership of your spouse's assets. If the house (that you helped to pay for) was (legally) his the day before the wedding, it still will be (legally) his the day after.

In the event, which God forbid, of an unhappy break-up you could head off to court and mount an argument saying that your expenditure on enhancing the value of his property wasn't intended as a gift, and the court should recognise that you have an equitable interest in the property and are entitled to a share in the value, or at least to the repayment of what you contributed. Your prospects of succeeding in that are really quite good (though they are a bit worse if he can produce a bit of paper that you signed in connection with the mortgage application, as bee06 refers to, saying "yes, I understand that I will have no claim on the house").

But you really don't want to be in the position of having to argue that. If you and your partner think of yourselves as building and owning this house jointly, then document it that way from the beginning. Before you borrow or build (a) marry, and (b) have him transfer 50% of the site to you. Because you will be a married couple, there'll be no tax cost to the transfer of the half-share.

I get that you don't want to spend a lot of money on a wedding when you still don't have a house, so have a small and low-cost wedding. But it makes no sense to enter into a massively disadvantageous financial arrangement in order to keep open the option of having a really nice party. If you really, really don't want to marry until you can do it properly (i.e. expensively) then have him transfer the half-share anyway, and just wear the tax cost.

TrixIrl · 11-10-2016 11:39AM

Hi All, My earnings will cover 100% of the mortgage even if he was fully unemployed. As it is he also earns good money (just not on a permanent contract) so if they can take his last 3 years of earnings in lieu of permanency into account we'll be laughing. We have had a costing drawn up and I comfortably cover all stress testing and repayments on my own for what we want... but if he's counted as an applicant on the mortgage, it will automatically reduce our eligible amount from what've I've seen.

The simplest solutions would seem to be either to get married or him to transfer half the site and for me to pay tax on same.

Don't get me wrong, this is the man I'm going to be with for the rest of my life. I would be 100% happy with an anonymous registry office with strangers off the street - I used to be a wedding coordinator for years and years and the sheen has pretty much worn off them for me anyway! He has different ideas and would want the 200 people in a hotel wedding which I would love to have with him either...just not at the expense of delaying building our home! I would hate the idea of getting married for a tax/mortgage loophole as such which I know sounds very naive but...

We're booked in to meet a couple of brokers and hopefully we can get sorted. If all comes to all, I'll pay for the site to be partially transferred... or else book flights to Vegas

Right2Write · 11-10-2016 02:42PM

TrixIrl wrote: »

I would hate the idea of getting married for a tax/mortgage loophole as such which I know sounds very naive but...

We're booked in to meet a couple of brokers and hopefully we can get sorted. If all comes to all, I'll pay for the site to be partially transferred... or else book flights to Vegas

But you wouldn't be getting married to avail of some tax loophole. Civil marriage exists to protect your joint interests. It's a legal construct as much as a family and religious one.

Vegas? You can get married at no great expense in a civil ceremony here but you'd know that. Just invite a few close friends and then in time, have a big family anniversary bash, renewal of vows etc.

Peregrinus · 12-10-2016 01:15AM

Right2Write wrote: »

But you wouldn't be getting married to avail of some tax loophole.

Seconded. You'd be getting married to align your public, formal, administrative status and treatment with the reality of your life.

Unmarried - How could this affect a self-build mortgage?

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