Relationship Split Equity Split

MrBenten

Ok

We have split up after 4 years and we are selling the property.

Selling price 235000
Mortage 160000
Her deposit 30k (no Prenup attached)


She wants interest on the 30k then the rest split 50-50. However one of us can keep the mortgage product we are on now and can transfer it to a new property. Tracking the BoE base rate +2%, which is obviously very good. She wants it so is it out of the realms of fairness to be offered compensation for who ever gets the better rate? Also am I right in thinking that the equity in the house can legally be split 50 - 50 ?? She moved out 16 months ago and has not paid the mortgage since. I rented a room out but that was nothing to do with her. Does this affect anything?? Is she entitled to interest on the 30k? She's hired lawyers in the thought of trying to claim everything. I dont even want her deposit

Any advice would be welcomed as things are getting nasty

Fire_Fox

What do you mean no prenup? Which country are you in? If things are getting nasty and she has instructed a solicitor you need legal advice too. You letting a room is NOT none of her business, in theory you should have paid her half the rent and she should have paid you half the mortgage. You may have paid more mortgage than her but presumably she had to pay to live elsewhere. She may be trying it on with the interest on the deposit, especially if there is no deed of trust. IIRC a deed of trust can be set up for that person to own an amount OR a percentage, not sure you can have it both ways unless there was a specific agreement to that effect but again you need legal advice. Chances are the property has not increased in value by the base rate anyway, more likely the opposite.

MrBenten

Ok prenup was the wrong word im in the uk. She new about the room being rented to cover the mortgage. She rented a place during that time.

ixwood

IMHO, the fair way to do it, is to work out what % of the house she owns and give her that % of the equity. So 100k house bought with a 20k deposit for example. her deposit bought 20% of the house, with 80% jointly owned, so she owns 60% of the house/equity.

pinkshoes

What did you buy it for 4 years ago?

You need to use her £30k as a %, so if you bought for £235k 4 years ago, and sell it for £235k, then she gets only her £30k back, as there's been no % increase in equity. If it sells for less than you bought it for, then she gets less back.

I presume you always paid the mortgage 50/50?

It gets more complicated in that she hasn't paid any mortgage for 16 months, so any equity increase/decrease in this time would be your money, not hers, so I suggest working out a price 2 years ago for what it was worth when she stopped contributing, and the % change.

MrBenten

Price bought for 208000. One sticking point is the mortgage product, we both want it however only one of us can get it. If I get a new mortage for 160000 on a new product Prob 5.5 % over the next 22 years she'll be over 50 k better off.

silvercar

This was a joint house and you are splitting up, hopefully without making the solicitors the only winners in this.

I would give her back the deposit and split the equity 50/50. Remember that you may not get full asking price and any sale costs need to come out of that equity.

If you want to get excessively detailed. She should have paid the mortgage, you should have paid her half the market rent for the property and kept the rental income to compensate this.

silvercar

MrBenten wrote: »

Price bought for 208000. One sticking point is the mortgage product, we both want it however only one of us can get it. If I get a new mortage for 160000 on a new product Prob 5.5 % over the next 22 years she'll be over 50 k better off.

She can get a better interest rate because she has a larger deposit.

So it would make more sense for you to keep the good rate, but will the lender let you do that if you have a smaller deposit on the new place? If not, then you have little option but to let her keep the deal.

You can't look at the gain in interest rates over the next 22 years. A lot can happen in 22 years, look what happened in just 4 years.

If you want to argue about the rates, look at what yoo could get on the market and what she could get then decide some balancing, but I would suggest your frame should be 2-5 years not 22.

DVardysShadow

The mortgage should go to whoever will pay most for it.

PasturesNew

I think asking for interest on the £30k's a bit rich, she's had the enjoyment of the house and some gains in value.... bit greedy that bit.

<sebb>

PasturesNew wrote: »

I think asking for interest on the £30k's a bit rich, she's had the enjoyment of the house and some gains in value.... bit greedy that bit.

Totally agree! The alternative is to sell the flat and is she then happy to share the costs of selling which will run into thousands?

Also, if for example, the house price had stayed the same, or even fallen, then would she still be expecting interest on it? Asking for interest and a share of the equity is double counting IMO.