who pays more?

pope_acute

Hi just a question i have about a mortage we are going for.
Its £200,000 girlfriend has £30,000 for deposit, i have nothing but I earn more per month. We have agreed to that i should pay more as she had the large deposit.But what is a fair ammount?how do you work it out?If say the rate is 3.99% A&L and the monthly repayment is £954 over 30 years.

theartfullodger

It would help if you could indicate what you each earn.

If, say, you earn £60k and she earns £20k then I'd suggest....

1. (If I have the name right) a Deed-of-Interest which gives her the right to the £30k she is putting in. i.e. if you split up or one of you goes-under-a-'bus-and-dies then her interests should be protected...

2. I'd split the payment of £954 pro-rata so you pay 60/80th - i.e. 3/4, she pays 20/80ths i.. 1/4. So the numbers would be £715:50 & £238:50/mo each.

But you need to agree between you what is reasonable...


PS According to my calculations £200k over 30 years @ 3.99% should be £953:68 not £954.

Good luck with you new home!

Artful

pope_acute

cheers for the advice, appreciate it. i got that figure aswell but i rounded up 32p

silvercar

Who takes the last slice of bread? I earn 20% more but have already eaten 2 more of the 17 slices.

If you are going to live together you need joint finances. Or you will spend your whole time together argueing. Draw up a deed to protect the deposit in the event of a split, decide on terms regarding a sale, then sort out a joint bank account.

Robert_Sterling_3

I spent about an hour working out what would be an appropriate division for the payment of the rent.
I saw myself in the role of a father wanting what was fair for my daughter.
I arrived at what I thought was a fair division for payment of the rent.
But when I saw the figures you arrived at and an earlier poster also arrived at I thought that sharing the rent in the ratio 3:1 was satisfactory recompense for your girlfriends initial investment provided her £30,000 was refunded from any sale of the property caused by a breakup. ( Even if there is negative equity she should only be called upon to contribute half after you had expended £30,000 )

My agreement to your figures only applies if you do have salaries in the ratio 3:1.

getmore4less

Robert_Sterling wrote: »

I spent about an hour working out what would be an appropriate division for the payment of the rent.
I saw myself in the role of a father wanting what was fair for my daughter.
I arrived at what I thought was a fair division for payment of the rent.
But when I saw the figures you arrived at and an earlier poster also arrived at I thought that sharing the rent in the ratio 3:1 was satisfactory recompense for your girlfriends initial investment provided her £30,000 was refund from any sale of the property caused by a breakup. ( Even if there is negative equity she should only be called upon to contribute half after you had expended £30,000 )

My agreement to your figures only applies if you do have salaries in the ratio 3:1.

This is so wrong. The £30k buys a share of an asset and should change in value with the change in the asset UP or DOWN.

For a £200k house the £30k buys 15%. thats what you are due 15% after costs(not mortgage) no more no less.

If you want the contributions to the mortgage to reflect ownership then you need to treat the mortgage(£170k) as 85% and the £30k as 15%,

If you want to go 50:50 ownership then the mortgage needs to be split as follows

£100k : £70k. on payments, so that is 58.8%:41.2%
(note rate and term make no difference it is the amount of equity you buy that determines the %)

If you split you get 50% each of the proceeds and each pay 58.8%:41.2% of any outstanding mortgage and keep the rest.

calculations for different equity split work in a similar way but given the 20% salary diff I would go for 50:50 ownership it is so much easier.

(woops got the 20% from the wrong post anyway if you want 50:50 thats the way to do it)

any capital enhancing improvements should be split 50:50.

Note:
To test if a proposed method of sharing(money in ,payments, money out) works it must work for all values and all senarios.

So with the get your money back that you put in method this breaks down if you both put in £100k or the value of the house drops to Zero.

opinions4u

Are you going to apply similar calculations to the gas bill, the milkman and the weekly shop? What about the council tax?

After all, without the £30k you wouldn't have these "joint" costs would you?

I think the solution is along the lines of:

1) Get the solicitor to draw up the deed preserving her £30k for, say, 5 years (with a clause that reflects changes in house prices).

2) Pay your salaries in to your own accounts.

3) Agree who pays what portion of the OVERALL bills (not just mortgage) and set up a standing order for your individal amounts in to a joint account (perhaps adding 15%-20% to the amounts required). Review these contributions every time you get a pay rise or every time a bill changes.

4) Only use that joint account for the direct debits etc that cover the household bills. Try to avoid using the debit card!

Getting hung up on the mortgage payment alone will leave everything else unresolved and lead to arguments.

Agree the whole household budget now, and build slack in to it to ensure you set aside more money than the bills will come to.

Robert_Sterling_3

getmore4less wrote: »

For a £200k house the £30k buys 15%. thats what you are due 15% after costs(not mortgage) no more no less.

If you want the contributions to the mortgage to reflect ownership then you need to treat the mortgage(£170k) as 85% and the £30k as 15%,

If you want to go 50:50 ownership then the mortgage needs to be split as follows

£100k : £70k. on payments, so that is 58.8%:41.2%
(note rate and term make no difference it is the amount of equity you buy that determines the %)

If you split you get 50% each of the proceeds and each pay 58.8%:41.2% of any outstanding mortgage and keep the rest.

That was exactly the path I trod for about an hour.
I then abandoned it and went for the OPs solution.

taker920

Each to their own I suppose, I paid the £25k deposit on ours and I earn twice as much so i'm paying 60% of all the household costs too (just a random figure we agreed to).

In all honesty I wouldn't look to get the £25k back if things went pear shaped in the future but that's based on the fact that I have sufficient savings to cover myself anyway so I can understand other peoples point of view

Time2Go_25

Oh, I must be odd, when my now wife moved into my house I never thought to work out how much it was worth and what I should insist she paid for. I pay all the bills and mortgage she pays for our childs education and improvements to the house.

I can't even begin to work out who might have paid more over the 20 years we've been together.

silvercar

pdel61 wrote: »

Oh, I must be odd, when my now wife moved into my house I never thought to work out how much it was worth and what I should insist she paid for. I pay all the bills and mortgage she pays for our childs education and improvements to the house.

I can't even begin to work out who might have paid more over the 20 years we've been together.

Not odd, quite normal.

All the calculations are going to fall down if one partner temporarily stops work to look after a (joint) child, or is one partner then going to calculate appropriate maintenance to the stay at home partner?