What is fair when seperating?

Tweds

Hello all,
Apologies if this has all been covered before but I do have a specific question I would like some advice on.

My son and his girl friend have split up, he is staying in the home. They have a 2 year old son and a joint mortgage. Things are amicable at the moment and they are equally sharing access and all costs for my grandson.

She has already moved out and he is transferring the mortgage into his name only. The problem has arisen as to how much she should be given as a "pay off" - sorry don't like that term.

He brought £40,000 to the purchase of their present house as profit from the sale of his old house. The new house purchase of £144,000 was 3 years ago with a joint mortgage of £106,000. They have contributed to all bills for the 3 years on a 60 - 40 basis, him to her.

The house has probably dropped a little in value lately, say to £135,000 - £140,000 so if they were forced to sell up and share out (he and we really don't want this to happen), would he be entitled to recoup his £40,000? or as much of it as was left, or would everything be shared out on a 60-40 basis?

In the light of all these facts (sorry) what do you good people think would be a fair amount for my son to give his ex as a settlement figure?

Many thanks in advance for any advice given!!

sturll

Yes, he will get the proportion of money he contributed. So in this case if he sold the house for £140,000.
He should be looking to recoup approx £90,000, obviously the figure will be substantially less than this once the mortgage has been cleared and any other fees. But essentially he should be looking to get around a 65% share of the available monies.

He would do well to offer her this amount if things remain amicable. If they are becoming hostile he might want to offer he around the region of 30% since she wont accept this and 35% might then become the middle ground and accepted offer.

CB1979_2

doesn't it all depend on if they are equal partners on the deeds?

is it tenants in common or something like that?

bestpud

I don't know for sure but I think he will ge his £40k, as they are not married.

Can I say though that the child should be a priority, no matter what? I know arguments may become inevitable at some point but I hate to see children suffering while their parents fight over a few grand. It really is so much better for them if the parents can remian amicable. I guess you may know that already though so sorry if I'm speaking out of turn.

CB1979_2

get 3 evaluations done, so she can see the average (also may be worth pointing out to the EAs doing the evaluation the purpose of the valuations, ie to buy out ex and if you may find a further £5-10k may be knocked off )

to be honest she may not get anything, were they doing a repayment or interest only mortgage?

all depends if she "allows" him to get his £40k back and if the provision was made & documented that he would get that back following any break up.

honeypop

I was under the impression that the proportions for the split of money depends on what the deeds say, ie joint tennants, or tennants in common with the extra money he brought in to the purchase noted so he would have a higher percentage.

Tweds

Thanks for all the replies so far. I'm sorry if my original post was misleading but basically my son does not want to leave the house so he wants to pay a settlement to his ex that will be fair to both parties.

He just does not know what that amount should be?

CB1979_2

well it all depends what he's legally entitled to.

if it was stated that he will get the £40k back, they have a mortgage of £106k & if the house is worth £140k then she will have to walk with nothing.

have they actually paid off any of their mortgage? was it repayment or interest only?

anyway even after 3 years their mortgage is probably still worth £100k, which would still mean there would be nothing left after his £40k came out

if anything i'd offer a token £1-2k to help her & the kid set up somewhere, but we're certainly not talking £10k+!!

all depends how amicable it is, what she wants and if the £40k was stated in the deeds.

Tweds

Thanks CB1979.
I believe it is a repayment mortgage so I guess it has not diminished much in 3 years. I don't know if the £40k was stated in the deeds, I'll have to ask my son. He is going to arrange for a couple of EA valuations this week. This should help to clarify matters.

Threebabes

With only 36k equity, surely its not fair if shes contributed over the last few years towards the mortgage that she should walk away with nothing?

THe girlfriend has a child to provide for and a new home to set up.

Tweds

So what do you think is fair Threebabes? They are sharing all expenses relating to the child.