A Couple's Personal Finance Mortgage Question

Jas0nP

sharpy, you're post is as wrong as can be. Poker is beatable in the long run, you just don't realise it is so.

As i have said many many times throughout this the answer of what is exactly likely wont be followed by the couple but finding what exactly is fair obviously has benefits.

There have been two options suggested, one let Paula live rent free and one let Paula pay the whole lease and split the bills and both are massive unfair to different parts of the couple. So while you say Paula may resent John for what could be seen as being obsessive over the penny i'm sure Paula would resent John even more 20 years down the line when she has spent £40,000 on lease payments and has absolutely nothing to show for it. That's why i'm working this out.

beecher

I'm not sure what you expect any of us to say then. None of us treat life like a mathematical problem, because it isn't - life changing events happen without you having any control over them. What happens if Paula gets pregnant, or you suddenly find that you aren't winning any more - wouldn't that turn everything on its head?

You need to sort this out by talking to Paula - if she's happy to have it all sorted out by mathematical theorem and is such a clinical manner then I can only congratulate you on finding such a woman.

getmore4less

She cant afford to buy 1/2 this place that simple really.

If they want 50:50 he gives her a £125k loan(reduced interest rate) and she pays that off with the running costs are 50:50.)

I think for now she just lives there like a loger with benifits, share the running costs 50:50 and she pays a bit of rent(she gets subsidised because he wants to live in a place that is above there 50:50 means).

If the relationship goes OK they become a "proper" couple so no problem.

If it fails she walks and there are no complications trying to work out the equity he needs to pay her, there is none.

If she wants to build up equity she save money in an account and buys some when she can afford it(either this place or another if they split)


I would probably look for somewhere else £2k service/lease charges a year seems a lot to me, but then I have a freehold house(so mantainence comes in lumps rather thean spread though service charges).

Jas0nP

Hey getmore4less,

I'll preface for everyone else, what you suggested was what i was thinking would be the way to work out the 'fair' line and not what the couple will likely really do.

A 125k loan would really be too high for her, 50k so a 1/5 share of the apartment would be more affordable. It would be £265 in monthly payments and so just less than £350 after lease payments which she can currently afford, at reduced interest rate (i have little clue about interest rates, 4%?) after 25 years that would be paid off and she'd own 1/5 of the equity in the house.

So this would be a situation in which she'd be paying what she could afford and building up equity and fair for both parties. It's also pretty simple so i don't know why everyone so far has biting at my heels. It's also a lot fairer than all 3 solutions suggested so far.

I don't think her having to split the lease 50/50 is fair either. The lease payments are based on square footage so it's increased because John wants a bigger place, a £125k apartment would have a lease of about 2/3 of that so 1.2k/year. Her splitting that price would be more fair again. So her month lease payments would be £50 while Johns would be £111/month.

Mrs_Bumble

Jas0nP wrote: »

sharpy, you're post is as wrong as can be. Poker is beatable in the long run, you just don't realise it is so.

As i have said many many times throughout this the answer of what is exactly likely wont be followed by the couple but finding what exactly is fair obviously has benefits.

There have been two options suggested, one let Paula live rent free and one let Paula pay the whole lease and split the bills and both are massive unfair to different parts of the couple. So while you say Paula may resent John for what could be seen as being obsessive over the penny i'm sure Paula would resent John even more 20 years down the line when she has spent £40,000 on lease payments and has absolutely nothing to show for it. That's why i'm working this out.

I didn't suggest either of these?

Jas0nP

beecher wrote: »

You need to sort this out by talking to Paula - if she's happy to have it all sorted out by mathematical theorem and is such a clinical manner then I can only congratulate you on finding such a woman.

Paula wants a way in which she can pay what she can afford and build up equity in the home.

Jas0nP

Mrs_Bumble wrote: »

I didn't suggest either of these?

I didn't mean to say you did. I was just making more of a general reply to everyone for biting at my heels saying 'in real life women resent guys who work everything out in a math way and then force them to pay!!!'. I'm really just trying to find out exactly what would be fair so there would be no resentment from one half of the couple overpaying and not getting a fair slice of the pie. Sure it's math and sure it's probably not going to be a realistic option but it will at least put a spirit level of fair on this so the couple can then use it for an easier option that will still be fair.

Mrs_Bumble

Jas0nP wrote: »

Hey getmore4less,

I'll preface for everyone else, what you suggested was what i was thinking would be the way to work out the 'fair' line and not what the couple will likely really do.

A 125k loan would really be too high for her, 50k so a 1/5 share of the apartment would be more affordable. It would be £265 in monthly payments and so just less than £350 after lease payments which she can currently afford, at reduced interest rate (i have little clue about interest rates, 4%?) after 25 years that would be paid off and she'd own 1/5 of the equity in the house.

So this would be a situation in which she'd be paying what she could afford and building up equity and fair for both parties. It's also pretty simple so i don't know why everyone so far has biting at my heels. It's also a lot fairer than all 3 solutions suggested so far.

I don't think her having to split the lease 50/50 is fair either. The lease payments are based on square footage so it's increased because John wants a bigger place, a £125k apartment would have a lease of about 2/3 of that so 1.2k/year. Her splitting that price would be more fair again. So her month lease payments would be £50 while Johns would be £111/month.

So if you proceed with this agreement is Paula going to be on the mortgage and lease, are you going to split the title as tenants in common 80/20? So that she is protected?

Jas0nP

That's something i need advice on as i have absolutely no clue there. I'm not sure how each party would go about protecting themselves. There can't put their names on the mortgage since there isn't one. I guess when it goes on the land registery both of there names go on as 80/20? I have no idea, so i'd need legal advice.

beecher

Jas0nP wrote: »

Paula wants a way in which she can pay what she can afford and build up equity in the home.

Which is why you have to sort out the definition of 'fair' with Paula, rather than taking a straw poll on here. My definition of fair is going to be very different from someone else's, and when you're in a partnership you need to compromise on both sides to come to a joint decision, unless you're very lucky and you both have identical ideas of what is the right approach.