Breaking up....Who gets what?

pingu2209

As you don't have a written contract about the deposit etc. Your girlfriend could easily tell you to go whistle for half of the deposit you put down.

Are you able to rent the property out and you and your girlfriend sell in a few years when you will have less negative equity or possibly break even?

chappers

how is the relationship between you and your ex.
Could you not negotiate, keep her on the mortgage but agree to pay all the mortgage etc until you can sell up and break even, and take into account the payments you make, when you do so. this would then leave you free to get a lodger to help pay the mortgage.
If not you will have to sell up and both suffer the negative equity.

Stuspillz

Our relationship is fine at the moment its early days, and its not my choice. She hasnt exspressed any worries about the mortgage at the moment. Wheras i really want to make sure we do this the right way financialy for the both of us. If we get it wrong it has the potential to hit us both hard. When we had the contract i was happy enough to sign to say 50% each if this should happen as i couldnt see it happening. But you learn from your mistakes.

Thanks for all your advice at least i can suggest different routes when shes ready to talk about this. Stu

getmore4less

pinkshoes wrote: »

She owes you half your £7k deposit.

You owe her half the fees and half her £1k deposit

You sell the property, and split the negative equity (debt) 50/50

Any furniture you can either sell, or divide equally. Don't forget second hand furniture isn't worth a lot...

mlz1413 wrote: »

My opinion on spliting is:
Sale price - fees = say £120,000
mortgage owed 132,000
so £12,000 owed to lender

You paid in £7000
g/f paid in £3000 (?)

So you owe £6000 to lender and £1500 to g/f
g/f owes £6000 to lender and £3500 to you
or you pay lender £4000 and g/f £8000


If neither of you can afford this then you can look at replacing one name on mortgage with another, but have the conversion about how to split proceeds / losses in the future before going ahead with this.

You could rent out and hope the market recovers but this could take some time.

Otherwise could you and g/f agree one lives in flat and the other does not contribute whilst not living there? Agreements on mortgage payments, bills, repairs if a lodger is allowed, if new partners are allowed etc need discussing as you are both jointly liable for mortgage.

These are wrong the cash was converted into a share of an asset with a variable value at the time of purchase and should be extracted as a share of the final asset.

Any algorthm used should work for any combination of numbers those above don't.

Take the 50% deposit/costs share the mortgage 50:50
buy for £140 mortgage £70k sell for £120

Person 1 has 75% £70k deposit + £35k mortgage
person 2 has 25% £35k mortgage

proper calcualtion
person 1 £90k-£35k gets £55k
person 2 £30k-£35k inputs £5k

The other way 1.
Sale price - fees = say £120,000
mortgage owed [STRIKE]132,000[/STRIKE] £70k
so [STRIKE]£12,000 owed to lender[/STRIKE] £50k equity

You paid in[STRIKE] £7000[/STRIKE] £70k
g/f paid in [STRIKE]£3000 (?)[/STRIKE] £0k

So you owe [STRIKE]£6000 to lender and £1500 to g/f[/STRIKE] £25k back less £0k
g/f owes [STRIKE]£6000 to lender and £3500 to you[/STRIKE] £25k back pays £35k
or you pay lender [STRIKE]£4000 and g/f £8000[/STRIKE] you get £60k gf pays -£10k

GF end up paying twice what she should.

Stuspillz

So you owe £6000 to lender and £1500 to g/f £25k back less £0k
g/f owes £6000 to lender and £3500 to you £25k back pays £35k
or you pay lender £4000 and g/f £8000 you get £60k gf pays -£10k

GF end up paying twice what she should.

---

Sorry i dont understand that theory, i put down £7000 and she put down £3000.
Assuming we sell for £120000, we would owe the bank £12000 between us?

Thanks Stu

mlz1413

I don't understand getmore4less's last post either, but their 1st post splitting it down to a % each is good.

But I notice your comment
"When we had the contract i was happy enough to sign to say 50% each if this should happen as i couldnt see it happening"

This suggest you already have a written agreement of 50% each of proceeds/losses without notice of inital input.

If so the loss of assumed £12k would be £6k each.

getmore4less

Stuspillz wrote: »

So you owe £6000 to lender and £1500 to g/f £25k back less £0k
g/f owes £6000 to lender and £3500 to you £25k back pays £35k
or you pay lender £4000 and g/f £8000 you get £60k gf pays -£10k

GF end up paying twice what she should.

---

Sorry i dont understand that theory, i put down £7000 and she put down £3000.
Assuming we sell for £120000, we would owe the bank £12000 between us?

Thanks Stu

yes you owe the bank £12k but how that is proportioned is the important bit.

The above was an example using different numbers(larger deposit) in the same algorithm to show that that it was wrong.

A lot of people get this wrong thinking money in == money out

The correct way to do it is based on what % of the asset you own.

This can be the cash and/or the share of the mortgage that you pay for.

In a previous post you have said 50:50 so that may be what you have to go with, 1/2 the shortfall each £6k unless making your total loss £13k hers £9k

If you also had the agreement to have £2k from her to make the initial input even(£5k each). then that would be £4k,£8k so £11k total loss each.

If the agreement had been done taking actual shares at purchase into account then

£132k mortgage (paid equaly) £66K each
£7k you
£3k her
total £142k you own 51.41% she 48.59%

Sell £120k you get -£4308 she gets -£7692 bank gets its £12k.
total loss you £11308 her £10692 which reflects the difference in ownership.

Because the diffence in the inputs was small (+-£2k) you should be able to come to some agreement.

Where larger one sided deposit are involved it can get very messy with the money in==money out agreements.

when deciding on any agreement do some test cases what happens if prices go up by XXX or down by XXX any agreement should work for all cases.

Proper shares based on equity works but it can be much simpler to just go 50:50, with differect sized deposits this can be done by splitting the mortgage payments differently to bring the % back to 50:50.

Another way to do it is to consider the inequality of the deposits as an loan(interest is an option) but this can break down with large deposits and price drops if the other person does not have the funds the deposit giver also looses out on price rises.

Stuspillz

GetMore4Less

Thanks that makes alot more sense, i think im going to offer that route, if she wants the quick sell.

The other option my family are telling me is to stay here let her move out but continue to pay half the mortgage/life insurance and council tax but not any bills. This way we can sit on it till the prices rise(fingers crossed).

Does anyone know if you can add a name(Ie Dad) to the mortgage that wont be living at the property just to boost the amount the bank will be willing to lend?Im capable of paying the mortgage and bills but if i try to go solo with the lender will they refuse based upon the amount i earn to the value?

Also if my GF wanted out of the mortgage should i charge her what she owes assuming we would sell?

Thanks Stu

getmore4less

Stuspillz wrote: »

GetMore4Less

Thanks that makes alot more sense, i think im going to offer that route, if she wants the quick sell.

The other option my family are telling me is to stay here let her move out but continue to pay half the mortgage/life insurance and council tax but not any bills. This way we can sit on it till the prices rise(fingers crossed).

Does anyone know if you can add a name(Ie Dad) to the mortgage that wont be living at the property just to boost the amount the bank will be willing to lend?Im capable of paying the mortgage and bills but if i try to go solo with the lender will they refuse based upon the amount i earn to the value?

Also if my GF wanted out of the mortgage should i charge her what she owes assuming we would sell?

Thanks Stu

Council tax is an occupation tax so she should not pay it(get the single discount unless you get lodger(s).
Mortgage and life cover ok but then this should be offset by the equivilent of 1/2 the place would rent for.

You could look at the buyout if you can get mortgage most likely they will want the negative equity paying off and a bit more.

In this case you should get a share of the negative equity back from her based on a selling price after costs, probalby best not to push too much on the costs. Mortgage valuation might not be in line with what you both think the place is worth making this a sticky situation, also if she does not have the money not so easy.

I think it is best to sell up unless you actualy want the place then a buyout to get a clean break, being financialy tied to an EX can only cause problems when a new OH comes along.

Stuspillz

Personally i want to sell and move on, but i know that without any financial backing im not going to get on the property ladder again for a while, hence sitting tight until the market sorts itself out.

Getmore4less

Do you know about putting someone on your mortgage to boost the amount the bank will lend me.

Thanks Stu