Being added to existing mortgage but unequal desposits / share

trixienolix

Hello there,

I just found this website and read an interesting article elsewhere but thought I should make a new thread as this could be long!

My boyfriend and I live together. he owns his house and as we are planning on staying together for ever we have agreed that it makes sense to add me to his mortgage (and deeds) so that I own part of the house too.

We have been trying to work out a formula that allows us to work out our share of the house when we sell it.

here are the facts:

1) He has owned the house for 2 years, I have lived in the house for 1.5 years
2) I have been paying him rent (which has meant he hasn't had to pay much for the mortgage)
3) He has spent about £8000 in doing up the house and about 200 days on DIY
4) I have spent £800 on the hosue and about 20 days
5) the house was bought for £204,000 and is now worth about £260,000
6) he paid a deposit of £51,000 and I am going to pay a lump sum of £15,000 to reduce the mortgage repayments
7) We will be paying the mortgage 50 / 50 once I am on the deeds

How do we work out how much of a share I own and how much he owns? We need to take into account the increase in price for the last 2 years that has been a result of (mainly his) DIY.
Also the fact that his deposit is consderably larger than my lump sum.

This might seem OTT when we are planning to be together for the rest of our lives, but he has a daughter from a previous relationship who lives with us and so he is keen to ensure that should anything happen to him, that she gets the money owed to her.

Do you think I should receive a share of the profit that has been made on the hosue in the last 2 years, given that I did not own the hosue but that I have contributed towards it and have been paying rent?
We have been driving ourselves crazy trying to work it all out in a "fair" way.

Any thoughts gratefully received.

thanks

bury_2

Hi,

How much rent have you been paying each month? Is this cheap or going rate for the area?

AndrewSmith

Hi,

I had a very similar situation following my own divorce. My ex-wife got my house(s) and I moved out

When I met my current partner she owned the house and I moved in with her. We spent time and money between us renovating and updating the property and the eventually sold the house to buy our own home together.

Basically what we agreed was this:

We bought for £385,000
Mortgage £200,000
Her equity £100,000
My cash £85,000

We agreed that should we split and sell the house in the first 5 years we would each get back what we had paid into the house thus following example:

Sell for £450,000
Mortgage £190,000
Equity £260,000

Her share £100,000
My Share £85,000

Remainder £75,000 is split 50/50 between us both.


We too tried to account for who had paid for what light fittings or bathroom accessories but decided that not only was this going to be almost impossible, it was fairer and easier to simply draw a line and make the decision at the point of actual cash investment.

The system we have adopted I think is a good approach.

Hope this helps

Andy

trixienolix

hello there,

thanks for your replies. In answer to your questions:

BURY - I have been paying a going rate for the room (given that i am sharing a room rather than having my own).

ANDREWSMITH - we thought about doing something like this too. I guess one issue with this method is that I will eventually profit from my boyfriends money as the split from now on will be 50 / 50, even thougth he put in more moeny than me, he will only ever get that exact amount back (plus a 50 / 50 split of the profit).

Also, what happens if he puts in another lump sum to the mortgage in the future, does he just get this amount back when we sell and then we split the profit 50 / 50 even thought the 50 / 50 split isn't quite "fair"?

And.. what would happen if the house were to lose value? Would he still get his equity back even though that equity had actually gone down?

Sorry for all the questions - your answer is very helpful, it's just that when we spoke about it there seemed to be alot of other situations that needed to be sorted out as well.

zag2me

You can probably get a contract drawn up with a solicitor. I understand why you are being careful, its very prudent.

molotov_3

You can get a solicitor to draw up a deed of trust and you will need to register your name against the address of the property to protect your interest in the property.

You could go for: you and your boyfriend get out the monies you individually put in and then divide any remaining equity (e.g. share the price increase / decrease).