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Buying a property with GF using my equity

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  • Buying a property with GF using my equity

    Hi there,

    Your thoughts and opinions will be great appreciated on the below:
    • I own a house in Auckland the QV is $611k I have a mortgage of $318k fixed until October 2016 at 5.79%
    • At the moment GF and I are living in one of the rooms the 2 other rooms is rented out, I receive C. $14k p.a.
    • One of the room mates has given notice and will move out on the 10th of next month.


    The question is that how will i structure it if i want to save myself from stress in the future if we do break up? My GF and I don't have cash saving for a deposit on a house. I planned to use my equity on my house to borrow.


    Thanks.

  • #2
    How long have you been together?
    My blog. From personal experience.
    http://statehousinginnz.wordpress.com/

    Comment


    • #3
      Originally posted by Envesty View Post
      Hi there,

      Your thoughts and opinions will be great appreciated on the below:
      • I own a house in Auckland the QV is $611k I have a mortgage of $318k fixed until October 2016 at 5.79%
      • At the moment GF and I are living in one of the rooms the 2 other rooms is rented out, I receive C. $14k p.a.
      • One of the room mates has given notice and will move out on the 10th of next month.


      The question is that how will i structure it if i want to save myself from stress in the future if we do break up? My GF and I don't have cash saving for a deposit on a house. I planned to use my equity on my house to borrow.


      Thanks.
      Sell half of your house to her ..then split everything
      Use that cash as a deposit for a separate investment

      Comment


      • #4
        As you are already concerned about breaking up I would suggest you get the property into an entity to exclude it from relationship property. Depending on how long the current relationship has been going this may already be a problem.

        Comment


        • #5
          If you have been together for three years or more, then mentally be prepared to lose everything if the relationship breaks.

          Then work towards rescuing whatever you can from the crash.

          (The voice of experience from one who has been there).

          Comment


          • #6
            No we only been together for 1 year and 2 months.

            Comment


            • #7
              See a lawyer - get a matrimonial property agreement.
              Must do that before three years are up.

              Comment


              • #8
                Originally posted by flyernzl View Post
                See a lawyer - get a matrimonial property agreement.
                Must do that before three years are up.
                This is the only way to do it. You both sign an agreement, that has been explained seperately to you each by different lawyers, so there is no conflict of interest, that sets out what you agree is and isn't relationship property. You need to have the house you buy with your equity in a separate entity. You need to have a discussion about how much each is contributing to the home - eg she might be helping pay rates, mortgage payments, maintenance - and how that should factor into the amount she owns of it. I'm assuming that you are borrowing against your equity, but both of you are responsible for repaying the loan - so your contribution is essentially risk to your existing equity if the loan goes into default, rather than actually putting in your own cash as such.

                For example, you might have her share initially at 40% to recognise your existing equity risk, but on the basis you and she each pay half all the outgoings then her agreed share goes up 2% per annum until it hits 50% five years later. There are as many ways to do things as there is human ingenuity. On the other hand, if she isn't going to be contributing to the house repayments at all, then her share would be zero and stay that way....but you'd have to be damned careful that she never contributed to maintenance or rates or repairs and even then if you stay together for many years and she stays home and has your babies you can bet the family court would be looking for a way to give her a share of the equity in the family home. Which is not necessarily an unfair thing where people have built a life together for decades.

                Comment


                • #9
                  Bite the bullet.

                  Use the equity to buy a joint home. You both have equal shares in.

                  Prenup for the following to be separate:

                  1) Your existing home
                  2) Your current Kiwisaver value
                  3) Future contributions to your Kiwisaver
                  4) Specifically write into the prenup that using your existing home for security will not taint it for the future.
                  5) As an option, sell your existing home to your company and have the company shares in the prenup.
                  6) Eventually, the existing home will be cash flow positive and need to buy another. Have the company buy it.
                  7) Any cash you put into your company is yours.

                  More, can't remember what is in one I looked at.

                  Her lawyer moaned that it was unequal. Male partner said, yip, I brought these to the table, I should be able to take them from the table.

                  You get my gift of equity to save you from years of saving for your first home. Think on how big that gift is.

                  www.3888444.co.nz
                  Facebook Page

                  Comment


                  • #10
                    I'm going to play amateur psychologist here. You've been together for over a year, she lives with you, and yet you refer to her as a girlfriend, instead of the more committed-sounding 'partner,' which was the word coined to describe a relationship in the nature of a marriage but without the ceremonial bit.

                    Is this some kind of deep-seated/subconscious acknowledgement that you view the relationship as not permanent? If it is, you need to do some serious thinking before taking any steps.
                    My blog. From personal experience.
                    http://statehousinginnz.wordpress.com/

                    Comment


                    • #11
                      Sid, some people use partner to mean married partner aka husband/wife/same-sex married couple, I could be with someone for 10 years and still call them bf/gf if we're not married. I've only started using partner recently because I've called someone's bf/gf their husband/wife when they weren't married, oops.

                      Comment


                      • #12
                        I'd be interested to hear how this pans out for you. I'm in a similar position with my partner of 1.5 years, she signed a flatmate agreement when she moved in and is paying rent so it's clear it's not contributions to the house, as far as I'm aware it's too late to put it in a trust once you've started dating someone. She's a really genuine person who I believe 100% would never try to claim on it but I come from the cynical everything has to made clear in writing background, we've chatted about property relationship agreements and she hates the idea of it and sees it as a trust issue, yet the person with the house is the only one with something to lose, hard situation unfortunately.

                        Comment


                        • #13
                          Originally posted by harmonist View Post
                          As far as I'm aware it's too late to put it in a Trust once you've started dating someone.
                          I suspect you're seriously mis-informed, saying that.

                          Originally posted by harmonist View Post
                          She's a really genuine person who I believe 100% would never try to claim on it but I come from the cynical everything has to made clear in writing background, we've chatted about property relationship agreements and she hates the idea of it and sees it as a trust issue, yet the person with the house is the only one with something to lose, hard situation unfortunately.
                          As most anyone will observe, the person you separate from is totally different to the one you 'shacked up' with.

                          Nobody wants to presume the worst. However, think of a relationship property agreement in the same way as property, chattels, vehicle and LL insurance.

                          Comment


                          • #14
                            Yep if you're worried about it go see a lawyer ASAP.

                            Comment


                            • #15
                              Originally posted by Perry View Post
                              I suspect you're seriously mis-informed, saying that.
                              I wish I was but unfortunately I'm not.

                              One option is to put the home into a family trust, but the trust would need to have been formed prior to the start of the relationship beginning to avoid any claims a partner may have for compensation under the Act. If a partner can show that the transfer of the home to the trust was made “in order to defeat the claim or rights” they would have had if it was not for the transfer, the Court can order compensation to be paid. Further, if a partner is able to show that the transfer of property was done after the relationship began, and that the transfer has had the effect of “defeating the claim or rights” that they would have had, then the Court is able to order that the party who owned the property must pay compensation to the non‐owning partner. Another option is to enter into a Contracting Out Agreement in the early stages of the relationship.

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