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There is a married couple in the UK where partner X owns a share of a property, while partner Y doesn't (i.e, Y is a first time buyer per se).

Can partner Y apply for a mortgage alone (in order to qualify for "first time buyer") but use for a part of the their deposit some money of partner X?

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    I would expect you would find it very difficult to find a lender who would be prepared to only have one half of a married couple named on the mortgage of the family home.
    – AakashM
    Oct 22 '21 at 8:54
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As far as a mortgage is concerned you'd need to talk to your bank. They may be prepared to write a mortgage for one of you but they would likely look at the finances of the other person too whether or not they are on the mortgage, even more so if one person is lending money to the other to enable the purchase to go ahead.

So there's rarely an advantage to being a first time buyer as far as a mortgage is concerned, being a first time buyer is mainly an issue for Stamp Duty. And as far as Stamp Duty is concerned, married couples and civil partners are counted as one whether or not you buy a house singly or together. So partner Y would be counted as owning an interest in that property too by dint of their marriage or civil partnership and therefore not entitled to the first time buyer discount on stamp duty.

In order to qualify for the discount both parties would need to be able to state truthfully that they had never owned a residential property at any point.

Here's an official confirmation of the one unit rule although that is talking about purchasing additional properties it does say it applies in all cases.

The government will treat married couples and civil partners living together as one unit. This is consistent with other areas of the tax system including Capital Gains Tax private residence relief where married couples are entitled to relief on one residence between them.

If you want more confirmation, here's a more direct statement from the Home Owners Alliance that says the same thing.

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  • Thanks a lot! I've learned from a solicitor, that there is a special type of letter, that X has to sign, stating that X doesn't own interest in the property. According to the solicitor this would solve the problem and allow Y to qualify for a first time buyer. Do you think that this interpretation might be correct?
    – aglearner
    Oct 22 '21 at 14:08
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The short answer is yes but there are implications.

  • Partner Y must be able to afford the mortgage repayments on their financial circumstances alone which would reduce affordability compared to applying a mortgage as a couple.
  • Lenders may be put off that partner Y requires money from partner X for the deposit, would X claim a portion of ownership due to contributing towards the deposit if the couple were to separate? These sort of things would concern a lender.
  • You may have to get a mortgage at a higher rate due to having fewer lenders to choose from.

So you have to weigh up if the implications of doing this are worth the extra hassle / cost of doing it this way instead of getting a joint mortgage.

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  • Dear Jsk, many thanks for this answer! The situation is as follows. X+Y wanted to apply for a 25% deposit mortgage, but they see that in case they pay the full Stamp Duty, they can't afford the deposit. So if they apply together they have to go for 20% and the mortgage rate will go from 1.19% to 1.69%. Also the Stamp duty increases by 18,5K, because X is not a first time buyer. At the same time, the salary of Y is enough to secure the same mortgage with 25% deposit. Finally, X doesn't mind not to be named as an owner (even though they provide money for the deposit). What would you say?
    – aglearner
    Oct 22 '21 at 11:09
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    I would strongly advise X to not enter into this arrangement, whether they "mind" it or not. Relationships and marriages can break down and then X is utterly unprotected having given their own money and got nothing in return. In financial affairs you should put romantic considerations to the side and make sure everyone's individual interests are protected (I am very happily married and have been for a long time, but you had better believe that the additional money I put into our first house deposit was properly registered as a larger portion of the ownership of the house belonging to me.)
    – Vicky
    Oct 22 '21 at 19:00

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