Buying half my girlfriends house

[ProperTee]

Here's my situation.
I don't currently own property (divorce/business). I have a girlfriend of some 3 years that I don't currently live with, but have marriage intentions down the track a bit, maybe in the next year or so.

She has a house worth around $450k, with a mortgage of $100k. Due to some changes in her circumstances, she is strugglng a bit while she is building up her business. I came up with an idea that may resolve a few issues. If I were to buy 50% from her, she would have her mortgage paid off and have over $100k to help keep her going while the business continues to grow as it has. The responsibility for repayments would fall on me, which is works for me as I was going to be buying property in the not too distant future anyway. I would probably move in, so repayments wouldn't be an issue for me. Although, I earn a relatively high income, I don't have significant savings as I am just now getting back on my feet after divorce and a business that went under.

My questions are:
- Do lendng institutions generally view these type of arrangements positively?
- What are the legal ramifications for either of us should things not work out?
- In these circumstances, would stamp duty still apply?

I appreciate any thoughts and opinions.

 

[rugrat]

Have you discussed this idea with your girlfriend yet? Just asking because I can see there are quite a lot of reasons why this may not seem like a very good option to her.

re lending - the loan would be secured against the mortgage in BOTH you names, or solely in your name with your girlfriend listed as guarantor (which amounts to the same thing - both of you being jointly and solely liable for any debt, only now her house is at more risk via higher LVR then it was before).

Legal ramifications should things not work out - your girlfriend would loose half her asset AND be held liable for half (if not all) of the new debt. Crappy situation for her seeing as she is currently in a much better position. Sexually transmitted debt sucks for everyone involved - men and women.


Stamp duty would be payable depending on the state you live in, etc. Someone else might be able to give you a better answer for this one.

Honestly, the situation you suggest is really beneficial for yourself, but quite detrimental for your girlfriend. If you really want to help her, maybe you should move in with her and pay her rent or board.

 

[jaycee]

Have you discussed this idea with your girlfriend yet? Just asking because I can see there are quite a lot of reasons why this may not seem like a very good option to her.

re lending - the loan would be secured against the mortgage in BOTH you names, or solely in your name with your girlfriend listed as guarantor (which amounts to the same thing - both of you being jointly and solely liable for any debt, only now her house is at more risk via higher LVR then it was before).

Legal ramifications should things not work out - your girlfriend would loose half her asset AND be held liable for half (if not all) of the new debt. Crappy situation for her seeing as she is currently in a much better position. Sexually transmitted debt sucks for everyone involved - men and women.


Stamp duty would be payable depending on the state you live in, etc. Someone else might be able to give you a better answer for this one.

Honestly, the situation you suggest is really beneficial for yourself, but quite detrimental for your girlfriend. If you really want to help her, maybe you should move in with her and pay her rent or board.

Wow, how does anyone else who builds a relationship ever do anything ?

 

[Mr. Fabulous]

Honestly, the situation you suggest is really beneficial for yourself, but quite detrimental for your girlfriend.

I wouldn't agree with this in it's entirety. It is, on the surface, a better deal for him. But if they get married, assuming no pre-nup is signed, half the house would become his anyway and he hasn't paid her a cent. Well, in theory anyway.

Personally, I don't think it's a good idea as it's too messy. I understand the OP's intention to help her out financially, but there are way too many variables.

If you really want to help her, maybe you should move in with her and pay her rent or board.

Hahahaha, oh man.... I imagine saying this to your girlfriend.

 

[kathryn d]

Have you discussed this idea with your girlfriend yet? Just asking because I can see there are quite a lot of reasons why this may not seem like a very good option to her.

Honestly, the situation you suggest is really beneficial for yourself, but quite detrimental for your girlfriend. If you really want to help her, maybe you should move in with her and pay her rent or board.

I agree with you rugrat.
If he does move in, maybe both sign a pre nup before.

 

[jaycee]

yeah, like, maybe he is trying to pull the wool over here eyse on
purpsose

 

[kathryn d]

yeah, like, maybe he is trying to pull the wool over here eyse on
purpsose

I don't think anyone here believes that.
He asked for opinions, and although it may seem like a great idea initially, there can be some very serious consequences for both, if the relationship or finances do not fare well.

 

[ProperTee]

Thanks all for the thoughts and opinions. I can say there is no wool involved. I can see her stressing and it really upsets me to see that, so I want to help.

As I see it, I would be helping in the short term, but there is potential for disaster if my situation changes for example (job loss, etc)

Moving in is not currently an option, but that's a topic for another forum. There are a number of non-financial considerations that I won't go into.

I guess what I might be better off doing is buying a property on my own and continuing to help her with bills as I have been. That way it doesn't place her property (family home) at risk and after marriage, they're both ours anyway.

The only issue I have is I don't have any significant savings, so not sure if I could borrow the money. Open to suggestions from the experts here.

 

[Mr. Fabulous]

I guess what I might be better off doing is buying a property on my own

Good move.

continuing to help her with bills as I have been.

Why are you doing this? Particularly since she is not your wife and you have little in savings. Is there a contract in place for her to pay you back? For your sake, I hope so, unless you enjoy throwing money away.

 

[cadence]

$100k mortgage at 7% interest rate, that's $7k a year or $135pw. Is she struggling with meeting the entire weekly mortgage payment or just in part?

I can see why some think you are getting a good deal by buying out half her share, but god forbid in the very unlikely even you guys decide to go separate ways (and let's be honest, there are factors which are entirely out of your control that may get in the way of true love), it's going to be very very messy for both of you.

As an individual, if you have the capacity to buy out her half share, you are better off buying your own property for that price. Start saving up a deposit.

Another option, you could just marry her now and start helping her to pay the mortgage. If you do separate down the track you will be entitled to half the house anyway without having to have taken on half the mortgage. If you stay together, then it doesn't matter because it all belongs to the one economic unit that is a married couple.

 

[rugrat]

I was just pointing out that this likely isn't the best option for the girlfriend from her point of veiw. If she is willing to go for it, then no harm, no foul - but I think that it would be unlikely, and unwise for her to do so. Certainly, if I were actually practicing as a lawyer (which I'm not) I would be advising her not to go down that path. I am sure that the OP had good intentions, but good intentions often pave the way to hell.

I am all for couples working together to mutual benefit in a relationship. Hell, my own relationship is completely co-dependant financially. I was just pointing out the pitfalls in this situation.

By the way, under family law, generally the partner bringing assets to a relationship, will retain custody of those assets until such a point as children are involved or a substantial amount of time elapses. Marriage does not in and of itself entitle the other party to half the others assets which were obtained before that point.

 

[ProperTee]

I haven't discussed it with her yet and based on some of the commonsense discussed here, I probably won't as my idea has the potential to place her property at risk if something goes wrong financially. So to help her in the long run, I need to build assets of my own and then we can combine ownership after marriage. In the meantime, I can help her develop the business to increase revenue which will lead to greater profits and less stress. I'm happy to chip in for some of the bills. Afterall, I do spend a lot of time there and use electricity, gas and water, internet, etc.

This probably isn't the right forum to discuss how I can get that "first" property, so Ill find a more appropriate one to ask/lurk in for that.

Thanks so much guys for helping me use my head.

 

[wylie]

I think this is a great forum to ask how to get into the "first" property.

Ask away.

 

[cadence]

By the way, under family law, generally the partner bringing assets to a relationship, will retain custody of those assets until such a point as children are involved or a substantial amount of time elapses. Marriage does not in and of itself entitle the other party to half the others assets which were obtained before that point.

Every case is different but just heard about my friend's unfortunate situation which happened about a year ago in NSW. He was living with his girlfriend for 11 months in his only property. No kids involved and she didnt contribute towards mortgage though paid some bills etc. They separated and she ended up getting half on the basis she was de-facto.... He probably rolled over a bit too quickly but it was clear that legal costs would start to mount so he made a decision and ... is still feeling the pain.

 

[tubs]

It makes sense to me. His g/f gets the cash she needs to keep her business going. And she doesn't seem to have any other way of getting it.

Paying her board/rent won't help because it's probably a bigger injection of cash she needs. And if her business needs to get over this hurdle to keep going it's probably the only way she can get it.

 

[citystar]

Every case is different but just heard about my friend's unfortunate situation which happened about a year ago in NSW. He was living with his girlfriend for 11 months in his only property. No kids involved and she didnt contribute towards mortgage though paid some bills etc. They separated and she ended up getting half on the basis she was de-facto.... He probably rolled over a bit too quickly but it was clear that legal costs would start to mount so he made a decision and ... is still feeling the pain.

Are there different periods of time per state to establish a de-facto relationship? I am in QLD and I thought it required a clear two years living together to be considered in a de-facto relationship?