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getmore4less wrote: »£227,000 £34,000 deposit- £25,000 me and £9,000 him). He is happy to leave the house with his £9,000 and that be the end of it.
if he is happy with 9k and has been paying half the mortgage you have got off lightly, he is not even asking for the £3k he paid off the mortgage or his share of the increase in value.
My friend is then going to take on his half of the mortgage and own part of the house through tenants in common and we will have unequal shares to reflect how much we have put in.
The house has been revalued at £240,000 recently (increase of £13,000) and there is £187,000 left to pay on the mortgage.
you each own 1/2 the mortgage £93,500 + deposits
if they are sticking in £9k that's £102,500 or 42.7% you £137,500 have 57.3%
on sale you split at those % and then pay off your share of the debt hats left.
1. Yes he's happy with 9k... the reason the house has increase so much in value is due to refurbishments that I have paid for.
2. am i right with saying that if we went for 42.7% and 57.3% that would mean that what ever sale price of the house, i would take away 57.3%. The only thing i worry about is that we are hoping to carry about a loft conversion on the house next year and therefore i need a %/clause in the deed which states that any increased equity AFTER 240K should be split 50/50... not sure how i do that!
Thanks again0 -
1. Yes he's happy with 9k... the reason the house has increase so much in value is due to refurbishments that I have paid for.
2. am i right with saying that if we went for 42.7% and 57.3% that would mean that what ever sale price of the house, i would take away 57.3%. The only thing i worry about is that we are hoping to carry about a loft conversion on the house next year and therefore i need a %/clause in the deed which states that any increased equity AFTER 240K should be split 50/50... not sure how i do that!
Thanks again
[FONT=Verdana, sans-serif]It is only a 57%/43% split of the equity when the mortgage has been paid off, until then the %age will be different. If you share improvement expenditure 50/50 in the future its a bit like increasing your initial deposits, you could try and incorporate a clause which covered that in the initial DOT or just revise the DOT when you know more about the loft extension.[/FONT]
[FONT=Verdana, sans-serif]
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[FONT=Verdana, sans-serif]Such a clause could get quite complicated, say you extend in 5 yrs time when the house has already go up in value 30%, you may need to agree a value for the house just before you extend.[/FONT]0 -
Wow... thank you so much for taking the time to figure this out for me.
So am i right in saying that... by adding this clause in the deed, it will mean that we will get our deposits back (with me getting the additional equity increase at the property has risen from 227k to 240k since the time I have owned it without my friend). It will also take into account that both % will differ as we pay more and more off the mortgage?
Thanks again
I think you're overthinking this.
Imagine if you sold your current property & you and your ex went your separate ways , you with £44K and your ex with £9k (assuming there were no costs)
You and your friend then buy another house for £240k with you putting in your £44K and your friend their £9K.
You own 18% of the house at that point, your friend 4%.
Wouldn't it be easier to say that the deposit equates to these percentages and then everything after that is split down the middle assuming payments for mortgages, maintenance etc are split as well?0 -
gettingtheresometime wrote: »I think you're overthinking this.
Imagine if you sold your current property & you and your ex went your separate ways , you with £44K and your ex with £9k (assuming there were no costs)
You and your friend then buy another house for £240k with you putting in your £44K and your friend their £9K.
You own 18% of the house at that point, your friend 4%.
Wouldn't it be easier to say that the deposit equates to these percentages and then everything after that is split down the middle assuming payments for mortgages, maintenance etc are split as well?
you're right- i think i am!
Yep- your last sentence makes a lot of sense. Thank you!0 -
Hi
Thanks so much for the reply..
What do you mean by you split the debt first?
The ownership is 57.3% 42.7%
if you sell then the proceeds BEFORE taking of the mortgage are split at that %.
THEN you pay off your share of the mortgage from that share
(it ends up the same as the way Tom is doing it but his is far more complicated.)
I find it much easier to ignore the free equity and just think of it as how much of the house do I own and how much of the debt do I need to pay.
makes for a much simpler calculation and makes unequal overpayments very easy to do as you just change the debt owed and can leave the share of the house constant.0 -
you're right- i think i am!
Yep- your last sentence makes a lot of sense. Thank you!
but it is wrong,Wouldn't it be easier to say that the deposit equates to these percentages and then everything after that is split down the middle assuming payments for mortgages, maintenance etc are split as well?
maintenance should be done on the % of the share you own which is deposit + half the mortgage.0 -
1. Yes he's happy with 9k... the reason the house has increase so much in value is due to refurbishments that I have paid for.
2. am i right with saying that if we went for 42.7% and 57.3% that would mean that what ever sale price of the house, i would take away 57.3%. The only thing i worry about is that we are hoping to carry about a loft conversion on the house next year and therefore i need a %/clause in the deed which states that any increased equity AFTER 240K should be split 50/50... not sure how i do that!
Thanks again
edit to fix the errors also bold
with your £44k+£9k with the debt 50:50 you start owning the house at 42.7% and 57.3%. (based on the £240k starting value with £187k mortgage)
if you pay for maintenance and improvements at that % you don't have to change the ownership, as you still own the same share when you come to sell and any improvement in value just works out.
no need for any intermediate valuations.
Then it comes down to how you pay for it, if you don't have the cash and have to raise it your shares of the debt might change from 50:50.
say you still owe £190k thats £95k each.
your loft conversion costs 50k and you need to borrow all of it.
the split based on the share is £28,650 & £21,350
You would then have the mortgage split £123,650:£116,350
keeping the share of the house separate from the share of the debt make things a lot simpler to work out.
You could even start out owning the house 50:50 by splitting the mortgage £76k:£111k.0 -
getmore4less wrote: »with your £44k+£9k with the debt 50:50 you start owning the house at 42.7% and 57.3%. (based on the £240k starting value with £196k mortgage)
if you pay for maintenance and improvements at that % you don't have to change the ownership, as you still own the same share when you come to sell and any improvement in value just works out.
no need for any intermediate valuations.
Then it comes down to how you pay for it, if you don't have the cash and have to raise it your shares of the debt might change from 50:50.
say you still owe £190k thats £90k each.
your loft conversion costs 50k and you need to borrow all of it.
the split based on the share is £28,650 & £21,350
You would then have the mortgage split £118,650:£111,350
keeping the share of the house separate from the share of the debt make things a lot simpler to work out.
You could even start out owning the house 50:50 by splitting the mortgage £85k:£111k.
Right.. I think im getting there. Thanks so sticking with me!
So... we start 42.7% and 57.3%.
But then, we will be paying for mortgage and maintenance (including the loft conversion) at 50:50.
So the 42.7 and 57.3 remains. What i worry about, it that these % only take into account the deposits we have put in- it doesn't take into account that due to MY improvements over the last year, the house has increasing £13k in value. I don't want to loose this and my friend to walk away with part of this.
Does that make sense?0 -
I think there are errors in my last post you quoted will check in a bit.Right.. I think im getting there. Thanks so sticking with me!
So... we start 42.7% and 57.3%.
But then, we will be paying for mortgage and maintenance (including the loft conversion) at 50:50.
that will cause you no end of issues trying to work out who owns what best best to make them at the ownership % and just have the mortgage 50:50.
it keeps everything very simple
So the 42.7 and 57.3 remains. What i worry about, it that these % only take into account the deposits we have put in- it doesn't take into account that due to MY improvements over the last year, the house has increasing £13k in value. I don't want to loose this and my friend to walk away with part of this.
That is included in your £44k worth you started out with only £25k if you remember
Does that make sense?
your starting point based on current value £240k not the old value £227k
you £44k
them £9k
mortgage £187k or £93,500 each because you want to pay 50:50
The £240k is split £137,500:£102,500 or 57.3%:42.7%
If the other person can afford a bit more monthly it might be worth splitting the mortgage to get the ownership 50:50.
if we guess at 2% over 25years that's about £800pm or £400pm each
to do it 50:50 you need the mortgage split £76k:£111k. or £325:£4750 -
getmore4less wrote: »I think there are errors in my last post you quoted will check in a bit.
your starting point based on current value £240k not the old value £227k
you £44k
them £9k
mortgage £187k or £93,500 each because you want to pay 50:50
The £240k is split £137,500:£102,500 or 57.3%:42.7%
If the other person can afford a bit more monthly it might be worth splitting the mortgage to get the ownership 50:50.
if we guess at 2% over 25years that's about £800pm or £400pm each
to do it 50:50 you need the mortgage split £76k:£111k. or £325:£475
I get it! Finally!
But....
So this is all well and good if the house value stays at 240k.
But.. what if in 5 years the house is worth 500k (unlikely but etrewm values help me)
A 57%/42% split wouldn't be fair as this increase will have happened when my friend is an owner of the house. Therefore is there any way of writing in that?
Thanks so so much0
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