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Rheys99
Posts: 17 Forumite
Hi all
I currently own a house with my ex partner. Completely amicable breakup and he plans to move out before Christmas into a friends house. We bought a house a few years back for £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.
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. So, that means essentially, £53,000 in equity which I am 'entitled to' if we (my friend and I) were to ever sell the property together.
My friend will be adding £9,000 is her 'deposit' to the house. Which then means I an entitled to £44,000 and my friend £9,000(?).
That then equates to 88% and 12% ownership shares of the entire house. Does that sound right? What ever is left over after a house sale, we would split 50% 50%...
So if the house sold for £300,000 down the line, I would get £53,000 and her £9000 and the other £238,000 would be split 50/50 ( 119k each).
These are the % we are planning on having written into the land registery and a dead of trust.
Can anyone see anywhere where I have gone wrong? Know of any issues this might cause? Have any general advise or pointers?
Thanks so much
R
I currently own a house with my ex partner. Completely amicable breakup and he plans to move out before Christmas into a friends house. We bought a house a few years back for £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.
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. So, that means essentially, £53,000 in equity which I am 'entitled to' if we (my friend and I) were to ever sell the property together.
My friend will be adding £9,000 is her 'deposit' to the house. Which then means I an entitled to £44,000 and my friend £9,000(?).
That then equates to 88% and 12% ownership shares of the entire house. Does that sound right? What ever is left over after a house sale, we would split 50% 50%...
So if the house sold for £300,000 down the line, I would get £53,000 and her £9000 and the other £238,000 would be split 50/50 ( 119k each).
These are the % we are planning on having written into the land registery and a dead of trust.
Can anyone see anywhere where I have gone wrong? Know of any issues this might cause? Have any general advise or pointers?
Thanks so much
R
0
Comments
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House valves at £240K
Current mortgage £187K
Your equity at moment - £44K (assuming £9K introduced by friend is used to pay off ex)
So at £240K valuation you own 18% & friend owns 4%, assuming mortgage etc is split 50:50.
If mortgage etc is split 50:50 I’d say you’d own 57% nd your friend 43%
In your example of selling at £300K, you’d get your £44k equity, your friend would get £9k and you’d split £247k.
Rather than set amounts why don’t think of the %ages that the deposit represents especially if every thing else is split down the middle0 -
Have you spoke to your mortgage company yet or are these 'back of a fag packet plans'?Be Alert..........Britain needs lerts.0
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Thanks so much!0
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Lender spoken too and all set in motion.... just need details for deed of trust etc.0
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gettingtheresometime wrote: »House valves at £240K
Current mortgage £187K
Your equity at moment - £44K (assuming £9K introduced by friend is used to pay off ex)
So at £240K valuation you own 18% & friend owns 4%, assuming mortgage etc is split 50:50.
If mortgage etc is split 50:50 I’d say you’d own 57% nd your friend 43%
In your example of selling at £300K, you’d get your £44k equity, your friend would get £9k and you’d split £247k.
Rather than set amounts why don’t think of the %ages that the deposit represents especially if every thing else is split down the middle
Was just about to pull you on your figures but noticed you have edited 😉😉Be Alert..........Britain needs lerts.0 -
£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.0 -
gettingtheresometime wrote: »House valves at £240K
Current mortgage £187K
Your equity at moment - £44K (assuming £9K introduced by friend is used to pay off ex)
So at £240K valuation you own 18% & friend owns 4%, assuming mortgage etc is split 50:50.
If mortgage etc is split 50:50 I’d say you’d own 57% nd your friend 43%
In your example of selling at £300K, you’d get your £44k equity, your friend would get £9k and you’d split £247k.
Rather than set amounts why don’t think of the %ages that the deposit represents especially if every thing else is split down the middle
You split first then pay of the debt, you don't get your deposits back first.0 -
[FONT=Verdana, sans-serif]The deed of trust needs to reflect the unequal deposit but equal mortgage payment so it will never be a straight %age equity share as that will move over time. The deed needs to be worded something like this:-
[/FONT] “[FONT=Verdana, sans-serif]The parties hereto declare that they hold the Property on a trust of land to the parties herewith DELCARE that they hold the property and the proceeds of sale (after discharging the mortgage and deducting there-from the costs of sale) and the net rents and profits until sale UPON TRUST for themselves as Tenants in Common:-
[/FONT]- [FONT=Verdana, sans-serif]18.33% (44/240) of the gross sale price of the Property less costs and fees for Partner A[/FONT]
- [FONT=Verdana, sans-serif]3.75% (9/240) of the gross sale price of the Property less costs and fees for Partner B[/FONT]
- [FONT=Verdana, sans-serif]The remainder split 50%/50% between A and B”[/FONT]
[FONT=Verdana, sans-serif]Using the above formula you can see how the equity split between A and B will move over time in the examples below:-
[/FONT] [FONT=Verdana, sans-serif]Day 2 – Value 240 less mortgage 187 = equity 53[/FONT]
[FONT=Verdana, sans-serif]A = 18.33% x 240 + 50% x 0 = 44[/FONT]
[FONT=Verdana, sans-serif]B = 3.75% x 240 + 50% x 0 = 9[/FONT]
[FONT=Verdana, sans-serif]So the 53 equity is split A 83% and B 17%
[/FONT] [FONT=Verdana, sans-serif]Year 5 – Value 300 less mortgage say 160 = equity 140[/FONT]
[FONT=Verdana, sans-serif]A = 18.33% x 300 + 50% x 73.75 = 92[/FONT]
[FONT=Verdana, sans-serif]B = 3.75% x 300 + 50% x 73.75 = 48[/FONT]
[FONT=Verdana, sans-serif]So the 140 equity is split A 66% and B 34%
[/FONT] [FONT=Verdana, sans-serif]Year 20 – Value 400 less mortgage £0 = equity 400[/FONT]
[FONT=Verdana, sans-serif]A = 18.33% x 400 + 50% x 312 = 229[/FONT]
[FONT=Verdana, sans-serif]B = 3.75% x 400 + 50% x 312 = 171[/FONT]
[FONT=Verdana, sans-serif]So the 400 equity is split A 57% and B 43%
[/FONT] [FONT=Verdana, sans-serif]You can see how B's equity share moves from 17% to 43% over time as the mortgage is repaid and value increases. Once the mortgage has been repaid the split will always be 57%/43% no matter what the value.[/FONT]0 -
getmore4less wrote: »You split first then pay of the debt, you don't get your deposits back first.
Hi
Thanks so much for the reply..
What do you mean by you split the debt first?0 -
[FONT=Verdana, sans-serif]The deed of trust needs to reflect the unequal deposit but equal mortgage payment so it will never be a straight %age equity share as that will move over time. The deed needs to be worded something like this:-
[/FONT] “[FONT=Verdana, sans-serif]The parties hereto declare that they hold the Property on a trust of land to the parties herewith DELCARE that they hold the property and the proceeds of sale (after discharging the mortgage and deducting there-from the costs of sale) and the net rents and profits until sale UPON TRUST for themselves as Tenants in Common:-
[/FONT]- [FONT=Verdana, sans-serif]18.33% (44/240) of the gross sale price of the Property less costs and fees for Partner A[/FONT]
- [FONT=Verdana, sans-serif]3.75% (9/240) of the gross sale price of the Property less costs and fees for Partner B[/FONT]
- [FONT=Verdana, sans-serif]The remainder split 50%/50% between A and B”[/FONT]
[FONT=Verdana, sans-serif]Using the above formula you can see how the equity split between A and B will move over time in the examples below:-
[/FONT] [FONT=Verdana, sans-serif]Day 2 – Value 240 less mortgage 187 = equity 53[/FONT]
[FONT=Verdana, sans-serif]A = 18.33% x 240 + 50% x 0 = 44[/FONT]
[FONT=Verdana, sans-serif]B = 3.75% x 240 + 50% x 0 = 9[/FONT]
[FONT=Verdana, sans-serif]So the 53 equity is split A 83% and B 17%
[/FONT] [FONT=Verdana, sans-serif]Year 5 – Value 300 less mortgage say 160 = equity 140[/FONT]
[FONT=Verdana, sans-serif]A = 18.33% x 300 + 50% x 73.75 = 92[/FONT]
[FONT=Verdana, sans-serif]B = 3.75% x 300 + 50% x 73.75 = 48[/FONT]
[FONT=Verdana, sans-serif]So the 140 equity is split A 66% and B 34%
[/FONT] [FONT=Verdana, sans-serif]Year 20 – Value 400 less mortgage £0 = equity 400[/FONT]
[FONT=Verdana, sans-serif]A = 18.33% x 400 + 50% x 312 = 229[/FONT]
[FONT=Verdana, sans-serif]B = 3.75% x 400 + 50% x 312 = 171[/FONT]
[FONT=Verdana, sans-serif]So the 400 equity is split A 57% and B 43%
[/FONT] [FONT=Verdana, sans-serif]You can see how B's equity share moves from 17% to 43% over time as the mortgage is repaid and value increases. Once the mortgage has been repaid the split will always be 57%/43% no matter what the value.[/FONT]
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 again0
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