Joint mortgage - deed of trust advice please

karma_pyjama

Hi

My bf and I are planning on buying a house this year. We will pay 50/50 of the mortgage, stamp duty and other fees but he is putting in 90% of the deposit (a 20% deposit) and I'm putting in 10% of it.

I know we need to get a deed of trust drawn up but I'm a bit confused about how it will work.

The easiest way is to say that when we come to sell he will get his original 90% back and I my 10% but this doesn't take into consideration the greater proportion of risk that he's taking and any extra payments I make.

Is there some kind of formula that we can apply?

Thanks in advance for any helpful responses!

karma_pyjama

Any help with this please? I know it's not the standard request on here...:(

Richard_Webster

Add up the cumulative totals of all of your respective contributions (including the mortgage payments and utility bills , Council tax etc as well as the initial lump sums) and keep running totals. Every 2-3 months you both sign something that sets out "as at X date A has contributed £Y,YYY and B has contributed £Z,ZZZ." (This is to minimise arguments about how much each has contributed!)

Have a trust deed that says that after paying off mortgage and paying estate agent and legal costs the resultant proceeds (or shortfall) are divided in the proportions the total contributions bear to each other.

After all it is only fair that over time the person contributing 50% of the outgoings but a smaller initial lump sum should find that his or her proportionate share becomes a slightly bigger percentage of the total.

CLAPTON

there is no 'right' way of doing this
it depends upon what you want to achieve

are you also keeping detailed records of who spends what on food, holidays, going out, etc so that these can be factored in if you split up?

are you expecting to pay additional money on the mortgage?

are you considering different income levels?

what actual sums of money are involved here

gauly

I suspect that your lawyer will be able to advise you, but I guess you can also choose how to do it. I would imagine a fair way would be somewhat like this:

Your boy friend has bought 18% of the house outright. You have bought 2% of the house outright. So if you sell, presuming you are get back more than you paid, I would think he should get 18% of the value of the house and you 2%. Any remaining equity could be split 50:50.

If the house sells for less than you bought it for then I guess he should get 90% of the remaining money and you 10%.

If it's in negative equity - then I guess thats for you to decide - probably split the debt 50:50 or you pay a bit more because he lost more deposit?

nervousftb_3

or you could split the difference of the deposits, so say he put in £9000 and you put in £1000, the difference is £8000. Then if you were to sell, once the mortgage is settled he gets the first £8000 then any remaining equity is split between you 50:50. This amount (the £8000) could be reduced if you made any overpayments. i.e. if you paid in £1000 as a one-off, then he would then get £7000 (you would need to keep signed documents and bank statements/mortgage statements showing proof of these overpayments).

Sammy85_2

My OH paid all the deposit on our new house (there was no way i could have saved up that kind of sum). All monthly payments (mortgage and bills) are split 50/50.

We have an agreement that if we split and sell then he gets his deposit money back and any other money after that is split 50/50.

getmore4less

My view is you seperate out the costs of ownership from living costs it makes it far too complicated.

HOUSE ownership
=============
House shares there are 2 ways and it is important to fix on one or the other to avoid the complications of tracking everything.

Do not fix ins/outs on cash value they buy part of a variable asset.

If you go 50:50

You look at the costs of buying and proportion these to make it 50:50.

eg £200k house 20% £40k deposit(split 90:10 so £36k:£4k) mortgage £160k
So for 50:50 you contibute £100k each
him £36k + £64k of the mortgage.
You £4 + £96k of the mortgage.

So you pay the mortgage 64:96.

Any cash inputs for repair/improvments are 50:50.


The other way is to split the mortgage 50:50.

him £36k + £80k = £116k
you £4k + £80k = £84k

So you own the house 58:42
Any inputs are split in this proportion to keep this proportion the same.


When you come to sell you split the proceeds on the ownership %
THEN pay of the shares of the outstanding mortgage(this is critical).


Any equation you use should work for all values of deposits mortgage shares.

Living costs
========
These you decide seperately and don't mix with the asset ownership, often people like to do these 50:50 r in proportion to the earnings.

getmore4less

Sammy85 wrote: »

My OH paid all the deposit on our new house (there was no way i could have saved up that kind of sum). All monthly payments (mortgage and bills) are split 50/50.

We have an agreement that if we split and sell then he gets his deposit money back and any other money after that is split 50/50.

Not a good idea,

that method fails for price drops since it protects the deposit at full value.

poppysarah

What would you expect to get back if you split up?
What does your OH expect?

Sammy85_2

getmore4less wrote: »

Not a good idea,

that method fails for price drops since it protects the deposit at full value.

I understand what you're saying, but Im happy with the arrangement we have.

It would take me years to pay my half back to him in installments, so instead he gets it back if we sell the house. If i had taken a loan from a bank for the deposit i wouldnt then turn around and say, "im sorry the house is worth less now so im only giving you X amount back." (not that i would take a bank loan out for it, but YKWIM)