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    • Rheys99
    • By Rheys99 3rd Dec 17, 10:46 PM
    • 17Posts
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    Rheys99
    Tenants in Common share calculator
    • #1
    • 3rd Dec 17, 10:46 PM
    Tenants in Common share calculator 3rd Dec 17 at 10:46 PM
    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
Page 2
    • Rheys99
    • By Rheys99 4th Dec 17, 5:56 PM
    • 17 Posts
    • 1 Thanks
    Rheys99
    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
    Originally posted by getmore4less


    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 much
    • getmore4less
    • By getmore4less 4th Dec 17, 6:09 PM
    • 30,837 Posts
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    getmore4less
    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 much
    Originally posted by Rheys99

    in what way is it not fair they owned part of the house they are due a share of the increase,

    The point is that this is the fair way to do it.

    the £500k would be split 57.3%:42.7% or £286,500:£213,500

    you then take off the share of the mortgage in my example of £187k @ 2% over 25y in 5y you owe £156k or £78k each

    you then net £208,500:£135,500
    • getmore4less
    • By getmore4less 4th Dec 17, 6:18 PM
    • 30,837 Posts
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    getmore4less
    remember.

    £227,000 (£34,000 deposit- £25,000 me and £9,000 him).

    The house has been revalued at £240,000 recently (increase of £13,000) and there is £187,000 left on the mortgage
    your ex owned (£9k+£193/2)/£227= 46.5% (you owned 53.5%)
    was due
    (£240*0.465)-(£187/2)=£18,100

    you are very lucky they only want £9k and that has increased your new share up to 57.3%
    • ThePants999
    • By ThePants999 4th Dec 17, 6:18 PM
    • 904 Posts
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    ThePants999
    Just to throw another thought out there - you could have the house, mortgage, maintenance and improvements all on a 50:50 split and separately agree that your friend owes you £17,500 Keeps things simple...
    • Rheys99
    • By Rheys99 4th Dec 17, 6:19 PM
    • 17 Posts
    • 1 Thanks
    Rheys99
    They are certainly due a share of the increase ONCE they move in (which will be when the house is at 240k). But Since buying the house I have spent a lot of money fitting a new bathroom/ fire/doors across the house that has been the reason that it has increased from 227k to 240k. I feel it is fair that I keep that money. All have that have been taken into consideration at 57%/42%.

    But any increase in value UPWARDS of 240k should be split 50/50 as they will be due a share...

    My mind is exploding!
    • Rheys99
    • By Rheys99 4th Dec 17, 6:21 PM
    • 17 Posts
    • 1 Thanks
    Rheys99
    remember.



    your ex owned (£9k+£193/2)/£227= 46.5% (you owned 53.5%)
    was due
    (£240*0.465)-(£187/2)=£18,100

    you are very lucky they only want £9k and that has increased your new share up to 57.3%
    Originally posted by getmore4less

    He owes me £10k for his car that I helped him buy, so not toooo lucky
    • getmore4less
    • By getmore4less 4th Dec 17, 6:25 PM
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    getmore4less
    They are certainly due a share of the increase ONCE they move in (which will be when the house is at 240k). But Since buying the house I have spent a lot of money fitting a new bathroom/ fire/doors across the house that has been the reason that it has increased from 227k to 240k. I feel it is fair that I keep that money. All have that have been taken into consideration at 57%/42%.

    But any increase in value UPWARDS of 240k should be split 50/50 as they will be due a share...

    My mind is exploding!
    Originally posted by Rheys99
    It's all taken into consideration you are starting with your friend at £240k

    you seem to forget they are buying £102,500 off you with a £9k deposit and a 1/2 share of the mortgage,

    you don't own all the £240k.
    Last edited by getmore4less; 04-12-2017 at 7:02 PM.
    • getmore4less
    • By getmore4less 4th Dec 17, 6:44 PM
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    getmore4less
    He owes me £10k for his car that I helped him buy, so not toooo lucky
    Originally posted by Rheys99
    About even then.
    put it behind you and get this sharing right.
    • getmore4less
    • By getmore4less 4th Dec 17, 7:07 PM
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    getmore4less
    Can you describe how you think this loft conversions is going to be funded and how you think it effects the ownership?

    I am starting to get quite concerned for your friend as even though they are buying nearly 1/2 the house from you you think they are only due 1/2 the increase in value.
    • Rheys99
    • By Rheys99 4th Dec 17, 7:20 PM
    • 17 Posts
    • 1 Thanks
    Rheys99
    I am getting so confused. I really am trying my best to get my head around this but it seems I'm coming across as selfish and greedy- I'm not, I'm just simply trying to process it all. I want the sharing to be fair, obviously, but I'm struggling to make the numbers work in my head at the moment- sorry

    Back to basics.... Just let's say....
    Day 1: my friend comes onto the mortgage of a 240k house with a mortgage of 187k (paying 9k and me paying 44k deposits) (am I right in saying this is essentially what it is?)

    Day 15: we've decided to sell. We get 240k for the house. We pay the lender back their 187k and we are left with 53k. Using the 57%/43% formula, I walk away with 30k and my friend 23k.

    If the percentages are right, surely I should be walking away with 44k and my friend, 9k

    ?
    • ThePants999
    • By ThePants999 4th Dec 17, 7:30 PM
    • 904 Posts
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    ThePants999
    Day 15: we've decided to sell. We get 240k for the house. We pay the lender back their 187k and we are left with 53k. Using the 57%/43% formula, I walk away with 30k and my friend 23k.
    Originally posted by Rheys99
    No, it's like this. You get 57% of 240K, and pay back half the mortgage, leaving £44K. Your friend gets 43% of 240K, and pays back half the mortgage, leaving £9K.

    Remember, the mortgage is a financial product, it's separate to the home ownership. "Equity" is a useful concept, but it's just a concept. You don't actually own only £53K of the house, you own the whole house - but you also owe £187K to a bank, secured on the house. So you take your share of the house (57%), and then you pay off your share of the loan (50%).
    • getmore4less
    • By getmore4less 4th Dec 17, 7:41 PM
    • 30,837 Posts
    • 18,445 Thanks
    getmore4less
    thanks.

    Remember, the mortgage is a financial product, it's separate to the home ownership. "Equity" is a useful concept, but it's just a concept.

    This is something a lot of people have a problem with because it was a mortgage secured on the house they think you have to take the mortgage off before doing any sums.

    if they paid cash(even different amounts) and borrowed the money somewhere else like off the bank of mum and dad I think most people get it. you get your share of the house and pay back your mum, it is no different with a mortgage lender.


    Tom has used a different method where you split the shares into 3, 2 deposits and a mortgage and work with those you get the same answers and for some it may be a better way to explain it.
    • Rheys99
    • By Rheys99 4th Dec 17, 7:47 PM
    • 17 Posts
    • 1 Thanks
    Rheys99
    thanks.

    Remember, the mortgage is a financial product, it's separate to the home ownership. "Equity" is a useful concept, but it's just a concept.

    This is something a lot of people have a problem with because it was a mortgage secured on the house they think you have to take the mortgage off before doing any sums.

    if they paid cash(even different amounts) and borrowed the money somewhere else like off the bank of mum and dad I think most people get it. you get your share of the house and pay back your mum, it is no different with a mortgage lender.


    Tom has used a different method where you split the shares into 3, 2 deposits and a mortgage and work with those you get the same answers and for some it may be a better way to explain it.
    Originally posted by getmore4less

    I think that's where I have been going wrong- I have been neglecting the fact it's a mortgage.

    Thank you so much for all of this! I really do appreciate every post
    • getmore4less
    • By getmore4less 4th Dec 17, 8:23 PM
    • 30,837 Posts
    • 18,445 Thanks
    getmore4less
    Just to throw another thought out there - you could have the house, mortgage, maintenance and improvements all on a 50:50 split and separately agree that your friend owes you £17,500 Keeps things simple...
    Originally posted by ThePants999
    This really does have merit(it is the get your deposit back method)
    but you need visibility of the time frame of getting the loan paid back

    If the finances going forward can be done 50:50 it keeps it clean(until that goes wrong*).

    The side loan comes from (£44k-9k)/2 = £17.5k.

    does your friend only have £9k to put in or is that what you think they need to do to buy out the ex.

    If they have more cash they could buy some of your share as well.

    If they had £26,500 total they could buy in 50:50 at the start and forget the side loan.


    * this is where you need to work through the can't pay, won't pay scenario which is not as complicated as it might sound.
    Last edited by getmore4less; 04-12-2017 at 8:27 PM.
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