My partner and I are buying a house together. I will own a smaller share than he will as I have a smaller deposit and earn less, so will contribute less to the mortgage.
We have no children together but we each have one child from previous relationships and want to leave our shares to our own children. We will have a solicitor to do the legal work but I want to be sure we ask the right questions. Can you give us some information?
There are two ways in which you can buy the house. If you buy it, as most couples do, as joint tenants, then your share passes automatically to your partner if you die before him and his shares passes to you in the same circumstances. However, if you both want to leave your individual shares to your children, you can buy as "tenants in common". Let's say you agree that you will own a quarter and your partner will own three-quarters. You can make a will leaving your quarter to your partner or to your child.
You need to think through all the possible consequences. Even before you get to the details, think about how you divide the ownership of the house and why the shares might have to be revised in future. For example, if you spend money on the house or end up contributing more to the mortgage, you might feel that you are then entitled to a bigger share. You need to be sure that the decisions made now can be revisited if your household circumstances change. You should also think about what might happen if you split up and one of you wants to sell his or her share.
If your partner makes a will leaving his three-quarters to his child and dies before you, that means you own a quarter of the house you are living in and your stepchild owns three-quarters of it. If you get on well together that may not be a problem, but if you don't it could be a nightmare. The child might want to sell to get his hands on the money. Or he might be happy for you to go on living in the house, but could make life difficult. Another option might be for your stepchild to buy your share. If you die first, it's your partner who will face the prospect of your child owning a share of his home.
When you hire a solicitor to do the paperwork for your new home, make sure you find someone who knows about inheritance tax, wills and trusts as well as house purchases, or who works in a firm of solicitors that has someone with those skills.
The firm I'm employed by does a lot of work for the public sector and there's a real possibility we'll lose contracts due to the spending cuts. I'm worried that I'll lose my job. My husband runs his own business but he mostly works for the public sector too and has been finding things difficult over the past 18 months. We're both over 50 and have never been in this position before. As we've both done the same kind of work for years it's hard to see what else we'd be qualified to do. We don't have any children but still have a mortgage to pay. We're managing to keep our heads above water, but if I'm made redundant we'll be in serious trouble. Can you give us any advice?
Gather as much information about your financial situation as possible. Find out what redundancy money you'd be entitled to. From that you should be able to calculate how much money you will have to tide you over until you find another job. Perhaps you could talk to your employer about reducing your hours or working on a freelance basis once contracts come in again. Employers can't afford to lose good employees so they may be pleased to know that you'll be there when they need you.
Go through everything you owe and everything you spend. Your mortgage and council tax have to be the priorities. If you do find it difficult to keep up the payments talk to your lender immediately. It may be possible to extend the period of the loan so that you pay over more years at a reduced monthly repayment rate. Lenders must do all they can to help you stay in your home.
Once you've worked out what you want to do about your mortgage, look at your bills. Can you reduce them or spread the cost so that you don't have to find big lump sums? If you have debts that aren't secured against your property, talk to your creditors about reducing the payments. Check your insurance policies. You may have paid for, and forgotten about, cover for some of your loans in case you lost your job. If your household income falls low enough you might be entitled to help with council tax and mortgage interest. When you've done all the figures, I hope things won't seem so bleak.