How can I legally and efficiently help my girlfriend build equity by helping with a mortgage?
"Have her chip in for the regular expenses, utilities, food, etc., and a bit for ""rent."" Then tell her to be sure to deposit to her retirement account, preferably a matched 401(k).  It's admirable to want her to build 'equity' but it's pretty convoluted. You can't actually give her ownership, and in the event you break up (I know you won't, but this is to help other readers) you'll have to pay her back a lump sum when she moves out. That might not be so easy." Equity means having ownership, and I think that's a REALLY bad idea in the scenario that you described.  If you stay together, there's really no upside to either of you in this scheme.  If you break-up then you'll have a terrible mess, especially if the break-up goes badly.  If she's really building equity, you're going to be faced with several hard questions: If this went bad at the end, it might be worse than a divorce in some sense since at least in the divorce you have established law to sort out the issues.  You'll be on your own here without a formal contract. (Marriage being a special case of a contract for our purposes here.) If she wants to share costs (which seems perfectly fair) then agree to rent and a split on utilities.  If you really insist on going down the path that you described, I think that you'll need some sort of contract, which probably involves a lawyer.  Anything short of that could not be considered having equity at all and will be completely unenforceable in the event of a bad break-up. (There is some notion of a verbal contract, but that's very hard to prove and subject to misunderstanding and misremembering.) Aside from all of these potential problems in event of a break-up, you would probably also be violating the terms of your mortgage, if you have one. From the bank's perspective, you are selling the property that is the collateral for that loan, which you're almost surely not allowed to do. There is no simple, legally reasonable, way for her to build equity by helping out with your mortgage, without her having a claim to your mortgage. The only 'equitable' thing she can do is rent from you.  If you want her to be building equity, have her start and fund a brokerage account for herself. If you have an affinity for real estate, have her buy REITs in said investment account. I agree with everyone who has simply told you 'Dont' and 'You can't' and add a few more considerations that you don't want to deal with: What you want to do is admirable but very complicated from a financial and legal perspective.  If this is really a route that you want to go down you should give up on the 'simple' and consider hiring a lawyer. "all the other answers are spot on, but look at it this way. really all you mean when you say ""building equity"" is ""accumulating wealth"".  if that is the goal, then having her invest the money in a brokerage (e.g. ira) account makes a lot more sense.  if you can't afford the apartment without her, then you can't afford to pay out her portion of the equity in the future.  which means she is not building equity, you are just borrowing money from her.  the safest and simplest thing for you to do is to agree on a number that does not include ""equity"". to be really safe, you might want to both sign something in writing that says she will never have an equity stake unless you agree to it in writing.  it doesn't have to be anything fancy. in fact, the shorter the better. i am thinking about 3 sentences should do the trick. if you feel you absolutely have to borrow money from her on a monthly basis to afford your mortgage, then i recommend you make it an unsecured loan.  just be sure to specify the interest rate (even if it is zero), and the repayment terms (and ideally, late payment penalties). again, nothing fancy, 10 sentences maybe.  e.g. ""john doe will borrow x$ per month, until jane doe vacates the apartment. after such time, john doe will begin repaying the loan at y$ per month...."" that said, borrowing money from friends and family almost never turns out well. at the very least, you need to save up a few months of rent so that if you do break up, you have time to find another roommate. disclaimer: i do not have any state-issued professional licenses." I'm glad that you feel like being fair and equitable to your party. Other answerers are, of course, correct that being fair and equitable to your girlfriend is not in your best interests but that's not what you're trying to do here and I commend you for it. There is nothing that stops you drawing up a simple legal contract giving your girlfriend a share of the value of your house in return for her payments. Just get it signed and witnessed and checked over by a legal representative. You can include reasonable terms for the money to be paid back if you separate - perhaps when you sell the property or within two years of the breakup - that don't put you in immediate danger of losing the property. Just make clear that this contract is between you and her for a sum of money linked to the value of your house; it does not establish any legal claim on your house itself. A reasonable level for her to claim the property would be one half of the change in equity between when you start joint paying and when you separate - should that happen. Have her pay something like a friendly monthly rent. This should be less than half of the monthly mortgage cost, since you are assuming the risk (and benefits) of a mortgage and closer to the rent of similar places near you. For when you get married and she is to have half the apartment, have a pre-agreed way to calculate a lump-sum that she needs to provide to match your own contributions up to that time, as if you two had equal contributions from the beginning. The financially precise way to do it would be to have her pay more than the mere sum of the amount (since she will be providing the amount at a later time than you), but I would be generous and skip this in your place if the difference is not too big. If you break up, she will have payed what would be a fair amount of rent, as if you two were renting, so, in this sense, it is fair that she would not have a claim on the apartment. In case that you two would like that she keeps the apartment, you can just sell it to her, having her pay this same amount as above and assume responsibility for the rest of the mortgage. There is no issue - and no question - if you get married.  The question is only relevant in the event that you go separate ways.  Should that happen, you imply that you would want to refund whatever amount your girlfriend has paid toward the mortgage. The solution, then, would seem to be to exempt her from any payments, as you will either give that money back to her (if you break up) or make her a co-owner of the condo (if you get married).  If you actually need her contributions to the monthly nut, you could give her a written agreement whereby you would refund her money (plus interest) at her discretion. "A 30-yr mortgage IS a committment. So, you are willing to commit to a place, but not your long-term girlfriend??? Either you don't do this ""cheap"" scheme idea, or you set up as a business arrangement, or you get married. This is quite a laissez-faire statement you make... ""Maybe we will eventually get married, maybe we will eventually break up, who knows."" Anything or anyone that is a ""who knows"" is not what you make a 30-yr committment on. I mean, unless you just want to risk throwing your money away. Now, man up, hire the lawyer to do official paperwork or else get a legal certificate of civil union or marriage or whatever you want to call it. If you try to do your cockamamie scheme ""on the cheap"" now, it will most surely cost you dearly in the future! Mixing money (particulary huge sums of 200,000 $!) when there is no legal obligation like marriage or a business contract, is a fool's errand! Now, grow up and do it the right way if you want to help her - and yourself too." "I just wanted to give you a different perspective, as I own a house (purchased with a mortgage), with my girlfriend. I think it can be done safely and fairly, but you do need to involve legal help to do it right. There really is nothing to be terrified about, the extra cost to set this up was almost irrelevant in the bigger picture of legal costs around purchasing and the documents describing the ownership scheme are quite straightforward. Maybe it's a UK thing, but it seems rather commonplace here.  We've chosen to hold this as ""tenants in common"" and use a trust deed for this when we purchased. We had a solicitor write the trust deed and it clearly states what percentage of the house is owned by either party and exactly what the steps would be taken, should we decide to end the trust (e.g. in case of a split-up). This includes things like the right to buy out the other person before selling on the market etc.  We also had to make wills separately to indicate what should happen with our percentage of the property in case one of us died as with this type of ownership it doesn't automatically go to the other person.  Finally we're both on the mortgage, which I guess is the main difference versus your situation. But again, you could get legal advice as to how this should best be handled." "This is fine, just have a plan before you go into it. Look up a co-ownership agreement contract off LegalZoom, they are like $15, or get a lawyer if you want. Decide if you want to be ""Joint tenants"" or ""Tenants in common"". You probably want to be joint tenants so that if one of you dies the property goes to the other person. Go through the agreement, make any changes you want, and then both sign it. These documents outline what happens if someone dies, or if you break up, or if you are allowed to sell your ownership, and anything else. Keep a record of who has paid what % of equity towards the house. Also look into tax laws, if the mortgage or house is only truly in 1 person's name they may get a tax break that the other person will not get. The co-ownership agreement is essentially the same agreement that happens when you're married, the only difference is that it happens automatically and implicitly when you're married. It's interesting that some people are saying this is a horrible idea when it's practically the same as the agreement you'd have if you were married. Whether you're single or married, if you own a house with another person and you break up, it's going to be a bit complicated. Get a contract in place beforehand so that things go as smoothly as possible. If you are both rational adults you shouldn't have any problems." I'm looking for something simple, legal, reasonably formal, easy to setup and tax efficient. You just described marriage. Get married.
In addition to finding another woman investor, you have an equitable option that is not unreasonable: ask your partner to buy out 3% worth of shares from you (which then gives her 54%, allowing you to then sell 5% to an investor and have it not dilute her below 51%: .54 * .95 = .513).   That keeps you whole but also keeps your woman-owned-business status. "Disclaimer: I am a law student, not a lawyer, and don't claim to have a legal opinion one way or another. My answer is intended to provide a few potentially relevant examples from case law in order to make the point that you should be cautious (and seek proper advice if you think that caution is warranted). Nor am I claiming that the facts in these cases are the same as yours; merely that they highlight the flexible approach that the courts take in such cases, and the fact that this area of law is complicated. I don't think it is sensible to just assume that there is no way that your girlfriend could acquire property rights as a rent paying tenant if arranged on an informal basis with no evidence of the intention of the arrangement. One of the answers mentions a bill which is intended to give non-married partners more rights than they have presently. But the existence of that bill doesn't prove the absence of any existing law, it merely suggests a possible legal position that might exist in the future. A worst-case assumption should also be made here, since you're considering the possibility of what can go wrong. So let's say for the sake of the argument that you have a horrible break up and your girlfriend is willing to be dishonest about what the intentions were regarding the flat (e.g. will claim that she understood the arrangement to be that she would acquire ownership rights in exchange for paying two thirds of the monthly mortgage repayment). Grant v Edwards [1986] Ch 638 - Defendant had property in the name of himself and his brother. Claimant paid nothing towards the purchase price or towards mortgage payments, but paid various outgoings and expenses. The court found a constructive trust in favor of the claimant, who received a 50% beneficial interest in the property. Abbot v Abbot [2007] UKPC 53, [2008] 1 FLR 1451 - Defendant's mother gifted land to a couple with the intention that it be used as a matrimonial home. However it was only put into the defendant's name. The mortgage was paid from a joint account. The claimant was awarded a 50% share. Thompson v Hurst [2012] EWCA Civ 1752, [2014] 1 FLR 238 - Defendant was a council tenant. Later, she formed a relationship with the claimant. They subsequently decided to buy the house from the council, but it was done in the defendant's name. The defendant had paid all the rent while a tenant, and all the mortgage payments while an owner, as well as all utility bills. The claimant sometimes contributed towards the council tax and varying amounts towards general household expenses (housekeeping, children, etc.). During some periods he paid nothing at all, and at other times he did work around the house. Claimant awarded 10% ownership. Aspden v Elvy [2012] EWHC 1387 (Ch), [2012] 2 FCR 435 - The defendant purchased a property in her sole name 10 years after the couple had separated. The claimant helped her convert the property into a house. He did much of the manual work himself, lent his machinery, and contributed financially to the costs. He was awarded a 25% share. Leeds Building Society v York [2015] EWCA Civ 72, [2015] HLR 26 (p 532) - Miss York and Mr York had a dysfunctional and abusive relationship and lived together from 1976 until his death in 2009. In 1983 Mr York bought a house with a mortgage. He paid the monthly mortgage repayments and other outgoings. At varous times Miss York contributed her earnings towards household expenses, but the judge held that this did ""not amount to much"" over the 33 year period, albeit it had helped Mr York being able to afford the purchase in the first place. She also cooked all the family meals and cared for the daughter. She was awarded a 25% share. Conclusion: Don't make assumptions, consider posting a question on https://law.stackexchange.com/ , consider legal advice, and consider having a formal contract in place which states the exact intentions of the parties. It is a general principle of these kinds of cases that the parties need to have intended for the person lacking legal title to acquire a beneficial interest, and proof to the contrary should make such a claim likely to fail.  Alternatively, decide that the risk is low and that it's not worth worrying about. But make a considered decision either way." While I agree with the existing bulk of comments and answers that you can't tell the lender the $7k is a gift, I do think you might have luck finding a mortgage broker who can help you get a loan as a group.  (You might consider as an LLC or other form of corporation if no one will take you otherwise.)  That is, each of you will be an owner of the house and appear on the mortgage.  IIRC, as long as the downpayment only comes from the collective group, and the income-to-debt ratio of the group as a whole is acceptable, and the strongest credit rating of the group is good, you should be able to find a loan.  (You may need a formal ownership agreement to get this accepted by the lender.)  That said, I don't know if your income will trump your brother's situation (presumably high debt ratio or lower than 100% multiplier on his income dues to its source), but it will certainly help. As to how to structure the deal for fairness, I think whatever the two of you agree to and put down in writing is fine.  If you each think you're helping the other, than a 50/50 split on profits at the sale of the property seems reasonable to me.   I'd recommend that you actually include in your write up a defined maximum period for ownership (e.g. 5yr, or 10yr, etc,) and explain how things will be resolved if one side doesn't want to sell at that point but the other side does. Just remember that whatever percentages you agree to as ownership won't effect the lender's view of payment requirements.  The lender will consider each member of the group fully and independently responsible for the loan.  That is, if something happens to your brother, or he just flakes out on you, you will be on the hook for 100% of the loan.  And vice-versa.  Your write up ought to document what happens if one of you flakes out on paying agreed upon amounts, but still expects there ownership share at the time of sale. That said, if you're trying to be mathematically fair about apportioning ownership, you could do something like the below to try and factor in the various issues into the money flow: The above has the benefit that you can start with a different ownership split (34/66, 25/75, etc.) if one of you wants to own more of the property. Owing money to family members can create serious problems. Taking out a purchase-money mortgage to pay your sister for her share is the best way to avoid future friction and, possibly, outright alienation. I guess most banks will not have an issue with that arrangement. The bank take collateral in the house for the amount your girlfriend needs to borrow, from her part of the house. Most likely the bank will accept the house' value as what you pay for it, assuming you pay fair market value - otherwise they will contact a valuation company to put a value of your new house. If they feel that her share of the house (50%) can cover her loan, they will definitely agree with the deal. You being a foreigner will, probably, have little to say in the matter, as long as you do not need to borrow money for your share of the house. "This is more of a long comment but may answer user's situation too. I have dealt with joint mortgages before in 3 states in the US.  Basically in all three states if one party wants to sell, the home goes up for sale.  This can be voluntary or it can go up via auction (not a great choice). In 2 of the 3 states the first person to respond to the court about the property, the other party pays all legal fees.  Yes you read this right.  In one case I had an ex who was on my mortgage, she had no money invested in the house ($0 down and still in college with no job).  [If she wasn't on the mortgage I wouldn't have gotten loan - old days of dumb rules] When we split her lawyer was using the house as a way to extort other money from me.  Knowing the state's laws I already filed a petition for the property but put it on hold with the clerk.  Meaning that no one else could file but if someone tried mine would no longer be on hold.  My ex literally spent thousands of dollars on this attorney and they wanted to sell the house and get half the money from the house.  So sale price minus loan amount divided between us.  This is the law in almost every state if there is no formal contract.  I was laughing because she wanted what would be maybe 50-75K for paying no rent, no money down, and me paying for her college. Finally I broke her attorney down (I didn't lawyer up but had many friends who were lawyers advising).  After I told her lawyer she wasn't getting anything - might have said it in not a nice way - her lawyer gave me her break down.  To paraphrase she said, ""We are going to file now.  My assistant is in the court clerk's office.  You can tell the court whatever you want.  Maybe they will give you a greater percentage since you put the money down and paid for everything but you are taking that chance.  But you will pay for your lawyer and you will need one.  And you will pay for me the entire time.  And this will be a lengthy process.  You would be better served to pay my client half now."" Her office was about 2 blocks from court.  I laughed at her and simply told her to have her assistant do whatever she wanted.  I then left to go to clerk's office to take the hold off.  She had beat me to the office (I moved my car out of her garage).  By the time I got there she was outside yelling at her assistant, throwing a hissy fit, and papers were flying everywhere.  We ""settled"" the next day.  She got nothing other than the things she had already stolen from me.  If I wouldn't have known about this loophole my ex would have gotten or cost me through attorney's fees around 40-50K for basically hiring a lawyer.  My ex didn't really have any money so I am pretty sure lawyer was getting a percent. Moral of the story: In any contract like this you always want to be the one bringing in the least amount of money.  There are no laws that I know of in any country where the person with the least amount on a contract will come out worse (%-wise).  Like I said in the US the best case scenario that I know of for joint property is that the court pays out the stakeholder all of their contributions then it splits things 50/50.  This is given no formal contract that the court upholds.  Don't even get me started with hiring attorneys because I have seen the courts throw out so many property contracts it isn't even funny.  One piece of advice on a contract if you do one.  Make it open and about percentages.  Party A contributes 50K, Party B 10K, Party A will pay this % of mortgage and maintenance and will get this % when home is sold.  I have found the more specific things are the more loopholes for getting out of them. There are goofy ass laws everywhere that make no sense.  Why would the person first filing get their lawyers paid for???  The court systems in almost all countries can have their comical corners.   You will never be able to write a contract that covers everything.  If the shower handle breaks, who pays for it?  There is just too many one-off things with a house. You are in essence getting in a relationship with this person.  I hear others say it is a business transaction.   NO.  You are living with this person.  There is no way to make it purely business.  For you to be happy with this outcome both of you must remain somewhat friends and at the very least civil with each other.   To add on to the previous point, the biggest risk is this other person's character and state of mind.  They are putting in the most money so you don't exactly have a huge money risk.  You do have a time and a time-cost risk.  Your time or the money you do have in this may be tied up in trying to get your money out or house sold.  A jerk could basically say that you get nothing, and make you traverse the court system for a couple years to get a few thousand back. And that isn't the worst case scenario.  Always know your worst case scenario.  Yours is this dude is in love with you.  When he figures out 2-3 years later after making you feel uncomfortable the entire time that you are not in love with him, he starts going nuts.  So he systematically destroys your house.  Your house worth plummets, you want out, you can't sell the house for price of loan, lenders foreclose or look to sue you, you pay ""double rent"" because you can't live with the guy, and you have to push a scooter to get to work. That is just the worst case scenario.  Would I do this if I were 25 and had no family?  Yea, why not if I trusted the other person and was friends with them?  If it were just a co-worker?  That is really iffy with me.    Edit: Author said he will not be living with the person.  So wording can be changed to say ""potentially"" in front of living with him in my examples." A simple and low-interest loan is probably the least likely to cause acrimony, aside from a direct gift. You seem to be describing an equity stake in their house, where some portion of the appreciation in value accrues to you (relative to your initial investment).  An equity stake in their house probably doesn't make much sense.  You sound as though you're not going to do any of the work aside from the contribution of money.  Equity might make sense as a way to reward you for efforts, such as home design or renovation, that increase the value of the home.  You probably don't want to be in a position where you are together improving the property and your payback only comes when she sells for more money.  What if you have different ideas of how to do it?  She has to live there and may want improvements for her needs rather than for buyers.  What if she asks you to pay for a portion of the improvement costs or resents you not offering?  What if she doesn't want to sell for some reason, so your money is locked up with her family choices?  Renovations can often be stressful, so these decisions may be made at difficult times. Either a gift or a low-interest family loan may be simpler for your needs.  You can just set the loan terms you want, say payoff over 10 years or a deferred payment schedule.  If she gets in trouble, you could perhaps delay or forgive payments.  I don't know the UK tax consequences of a loan of this nature, if any. As a general proposition, it's best to set clear and simple expectations at the beginning, and avoid agreements that require multiple decisions to be made consensually in the future, possibly during a time of stress. The mortgage and title of the house would be under both your names equally.  When I applied for a mortgage with my girlfriend, I was the primary applicant because of my credit score and she was the secondary because of her income (she makes more).  When all was said and done, it was explained to us that the mortgage was ours equally and so was the house, and that I didn't hold more ownership than her over either.  We were approved quickly and hassle free. This is our first house too. This is in Florida. "Simply paying him back the 50K to reduce ""his equity"" back to 30% doesn't necessarily mean that he still doesn't have a higher liq pref upon a liquidation event. You don't need the legal language to know...I deal with term sheets all the time, I don't deal in the legal language, we cut the deal with the term sheet and leave the legal language to the lawyers." Now I have been trying to figure out how to split the money that we both earn. From what I can see there are several concepts but none of them really seems ideal to me. There is nothing fair or unfair in such arrangements. It is what you both agree. You can try and make this as scientific as possible. But then there is no golden rule.  For example, your girlfriend makes 2200 now and due to child, she is making 1100. The child is both of your responsibility; so you need to compensate half of her salary loss. 550 and she takes the other half. If you hire a nanny to look after you kinds, it would say cost you 500. But your girlfriend is doing that job, so she should get additional 500 from common pot. Plus due to loss of few years in looking after the children, she has a lost opportunity in career growth. i.e. she may indefinitely make less money than she can... So one gets into all kinds of theories and analysis and any arrangements will have some or the other gaps.  So my suggestion, don't get too scientific about it. Just talk it out as to what you both feel how this should be and arrive it. It is something every individual has to agree. It also make sense to have the large assets [or assets that matter], like house, car etc in clear title and who gets what in case you decide to separate. Other should be incidental. Ultimately the bank will have first call on the house and you will be the only one on the hook directly to the bank if you don't make the mortgage payments. There's nothing you can do to avoid that if you can't get a joint mortgage. What you could do is make a side agreement that your girlfriend would be entitled to half the equity in the house, and would be required to make half the payments (via you). You could perhaps also add that she would be part responsible for helping you clear any arrears. But in the end it'd just be a deal between you and her. She wouldn't have any direct rights over the house and she wouldn't be at risk of the bank pursuing her if you don't pay the mortgage. You'd probably also need legal advice to make it watertight, but you could also not worry about that too much and just write it all down as formally as possible. It really depends if you're just trying to improve your feelings about the process or whether you really want something that you could both rely on in the event of a later split. I don't think getting married would make any make any real difference day-to-day. In law, with rare exceptions, the finances of spouses are independent from each other. However in the longer term, being married would mean your now-wife would have a stronger legal claim on half the equity in the house in the event of you splitting up. Assuming United States; answer may be different elsewhere. The best instructions I have seen for this were on the webpage of one of the law firms making an organized business out of intra-family loans, but any lawyer who can deal with normal bank loans should be able to help you set this up and get it filed with the appropriate authorities to make it a legally binding mortgage. Shouldn't cost you much in legal time to do it. You will have to charge interest; your lawyer can tell you what the minimum and maximimum interest rates would be where you are. Your interest income will be taxable. The borrower may or may not be able to deduct the interest paid from their taxes. Of course if the borrower has any sense they'll want to get their own lawyer to review the terms of the agreement, and to tell them whether they can deduct it from taxes or not. You actually have a few options. First, you can do a share split and then sell an equal number of shares from both you and your wife to maintain parity. Second, you can have the company issue additional shares/convert shares and then have the company sell the appropriate percentage to the third party while the rest is distributed to you and your wife. Third, you can have the company issue a separate class of stock. For example there are companies that have voting stock and non-voting stock. Depending on your goal, you could just issue non-voting stock and sell that.  Best bet is to contact a lawyer who specializes in this type of work and have them recommend a course of action. One caveat that has not been mentioned is that what/how you do this will also depend on the type of corporation that you have created. "It's all about access to capital: You can borrow against 401ks up to an extent. You can borrow against CDs outside of tax sheltered retirement plans. You can't borrow against an IRA, although there is a situation with a very small time frame that would still be state sanctioned with no tax penalties. I wouldn't recommend it. Annuities come with penalties. I've looked at many possibilities of accessing retirement capital without penalty, and 401k's offer that ability, but its also good to just have savings accounts and investments that are not tax-deferred. Borrowing against 401k pros: http://www.ehow.com/how_2075551_borrow-money-from-401k.html  cons: http://www.investopedia.com/articles/retirement/06/eightreasons401k.asp#axzz29TtJPoXO Outside of your general expenses and play money, money you put toward - say... - a house should be non-tax deferred. Because if you like borrowing, you can always borrow against the house, or any property. The root of the problem is liquidity and access to capital, understanding those fundamental concepts will answer most questions. ""Am I liquid? Yes/No"" ""Can I be liquid without losing money? Yes/No"" As usual, more is more, adjust your priorities accordingly." what reason would I have in buying an ETF? Apart from the efforts, the real reason is the ticket size. One can't buy shares in fraction. To truly reflect the index in equal weight, the amount to invest will be in multiples of millions [depending on the Index and the stock composition]   This related question should help you understand why it is difficult even for large fund house to exactly mimic the index. Why do passive ETFs require so much trading (and incur costs)?