Equity split..... am i being reasonable??

bagz_2 · 19 August 2015 at 8:45PM

Me and ex split leaving 2 kids and a house. I've moved out and let them stay in the mortgaged house.

I believe the equity of the house should be a 50/50 split from date we separated. Any equity from then on is hers. I've said I'll wait for the ex to decide when she wants to buy me out or when to kids are both 18.

BUT....... (i got thinking)...... Say my equity is £20k and house prices in the area went up 8% last year. Am i being reasonable to request that my share of equity factors in house price fluctuations? I could possible wait another 15 years for the money, which Im prepared to do for the kids, but £20k in todays money is likely to be worth a lot more than in 15 years time.

Does such agreements exist and does anyone have any experience of this?

Guest101 · 20 August 2015 at 9:26AM

bagz wrote: »

Me and ex split leaving 2 kids and a house. I've moved out and let them stay in the mortgaged house.

I believe the equity of the house should be a 50/50 split from date we separated. Any equity from then on is hers. I've said I'll wait for the ex to decide when she wants to buy me out or when to kids are both 18.

BUT....... (i got thinking)...... Say my equity is £20k and house prices in the area went up 8% last year. Am i being reasonable to request that my share of equity factors in house price fluctuations? I could possible wait another 15 years for the money, which Im prepared to do for the kids, but £20k in todays money is likely to be worth a lot more than in 15 years time.

Does such agreements exist and does anyone have any experience of this?

Its pretty simple, either you both stay on and pay the mortgage and split 50/50 whenever it's agreed.

or you take your equity now - @ £20k

You could take the £20k and buy another place?

bagz_2 · 20 August 2015 at 9:48AM

Guest101 wrote: »

Its pretty simple, either you both stay on and pay the mortgage and split 50/50 whenever it's agreed.

or you take your equity now - @ £20k

You could take the £20k and buy another place?

I wish it was that simple, but

a) i cannot afford to pay the mortgage and pay rent on my own place. (the ex is happy to pay the mortgage in full)

b) she cannot afford to pay out my half of the equity at this moment in time

Its not practical to sell the house either as its the family home to the kids.

I was just wondering whether equity shares mirror that of house price inflations.

Guest101 · 20 August 2015 at 10:41AM

bagz wrote: »

I wish it was that simple, but

a) i cannot afford to pay the mortgage and pay rent on my own place. (the ex is happy to pay the mortgage in full) - Fair enough.

b) she cannot afford to pay out my half of the equity at this moment in time - So she cant remortgage?

Its not practical to sell the house either as its the family home to the kids.

I was just wondering whether equity shares mirror that of house price inflations.

In theory you should get a share based on the percentage. So it's a £200k house, you currently own 10%, so you shoul dget 10% when it's sold.

But as with many things, emotions and time cloud this. If she cannot remortgage on her own, the practical thing is to sell. And both buy seperately.

Failing that, you need to go see a solicitor and come up with an agreement.

Also note:
1: you probably wont be able to get another mortgage whilst you are on this one. So home ownership is unlikely for you for X number of years
2: If she fails to pay, you will be liable for the balance.

RAS · 20 August 2015 at 1:06PM

Are you married or not?

bagz_2 · 20 August 2015 at 2:04PM

Guest101 wrote: »

In theory you should get a share based on the percentage. So it's a £200k house, you currently own 10%, so you shoul dget 10% when it's sold.

But as with many things, emotions and time cloud this. If she cannot remortgage on her own, the practical thing is to sell. And both buy seperately.

Failing that, you need to go see a solicitor and come up with an agreement.

Also note:
1: you probably wont be able to get another mortgage whilst you are on this one. So home ownership is unlikely for you for X number of years
2: If she fails to pay, you will be liable for the balance.

No we are not married, and have been separated for over a year now. Its only now that emotions have settled that we are talking about this.

She wont re mortgage as she cant afford to and I've agreed to keep my name on the mortgage, just to put a roof over the kids head. I understand the implications this has on me regarding my own place etc, but i can't force a sale and leave the kids homeless.......

I just want some reassurances for my equity and that it isn't losing value.

lazer · 20 August 2015 at 2:17PM

so house was worth £200k when you spilt up and had say £40k of equity in it, of which you want £20k, that is therefore 10% of the equity.

Get a solicitor to redo the deeds saying that you are now tenents in common with her owning 90% and you owning 10%, that way your equity is protected long term.

Guest101 · 20 August 2015 at 4:13PM

bagz wrote: »

No we are not married, and have been separated for over a year now. Its only now that emotions have settled that we are talking about this.

She wont re mortgage as she cant afford to and I've agreed to keep my name on the mortgage, just to put a roof over the kids head. I understand the implications this has on me regarding my own place etc, but i can't force a sale and leave the kids homeless.......

I just want some reassurances for my equity and that it isn't losing value.

Well you can force a sale and your ex can rent somehwere, or the kids can live with you. They're hardly going to be homeless.

For reassurance - see a solicitor and make an agreement that it will be sold on XX.XX.XX and you will receive YY%. Costs of sale to be covered by your ex.

Set up in the agreement that any missed payments, and liability which you have to honour will be added on to your final payout.

Guest101 · 20 August 2015 at 4:15PM

lazer wrote: »

so house was worth £200k when you spilt up and had say £40k of equity in it, of which you want £20k, that is therefore 10% of the equity.

Get a solicitor to redo the deeds saying that you are now tenents in common with her owning 90% and you owning 10%, that way your equity is protected long term.

I would not be hasty to do this. She could default, he ends up paying 80%, for 10%. - there needs to be a liability agreement regarding the balance, privately between the two parties (outside of the scope of the lender)

TBagpuss · 1 September 2015 at 2:13PM

lazer wrote: »

so house was worth £200k when you spilt up and had say £40k of equity in it, of which you want £20k, that is therefore 10% of the equity.

Get a solicitor to redo the deeds saying that you are now tenants in common with her owning 90% and you owning 10%, that way your equity is protected long term.

This is the starting ppint. You should also include in the agreement provision bfor payment of the costs of insurance and upkeep (likely to be reasonable to split this in the same proportion as you own the property) and to set out the situations in which the property will be sold (obviously this would include the children leaving school (specify an upper age as well, not just 'full time education' as that could leave you stuck till they leave university, or complete a PhD!) but might also include a situation when she was remarried or cohabiting, or in the event that the mortgage was more than x months in arrears.

You can also build in provision to state that she is responsible for the mortgage and that she will indemnify you for anything you have to pay towards the mortgage.

If she cannot remortgage and buy you out now, but you think she may be able to do at some point between now and the youngest child turning 18 you could include provision for the property to be sold a an earlier date (e.g. 5 years from now) but plan to agree an extension if she genuinely cannot buy you out at that time.

Equity split..... am i being reasonable??

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free