Changing Tenants-in-Common shares

hedgehopper_2

Hi all

My partner and I are currently sorting out who owns what portion of our new abode, and were wondering how 'set in stone' the shares you set out at the beginning of the purchase will be.

Since he is providing the deposit, we've decided initially to split things 70/30. However, i will be paying half the mortgage, which will make things more equal in around five years time.

Assuming all goes to plan, will it be easy enough to re-jig the shares so we own the house equally? Will there be legal fees involved or is it something we sort out ourselves? Will this happen automatically if we get married?

thanks all
HH

Imelda

Hi hedgehopper,

when my sister and I purchased a property she put down the 10% deposit and we paid half the mortgage & other costs each. We split it as follows:

my sister's interest was her 10% plus half the remaining 90% = 55%
my interest was half the 90% = 45%

Hope that helps.

CLAPTON

how much is the house ?
how much is the deposit

at first sight 70/30 seems a very unfair split if you are both paying half the mortgage

DVardysShadow

hedgehopper wrote: »

Since he is providing the deposit, we've decided initially to split things 70/30. However, i will be paying half the mortgage, which will make things more equal in around five years time.

Although it is not set in stone, if you get the percentage right at the outset, there is nothing to even out.

If he provides 20% initial equity , then between the 2 of you, you are renting 80% of the money. If the mortgage is split evenly, you are providing half the share bought by the mortgage. He should own 60% and you should own 40%.

If you split and sell, this should work out fine as long as there is a profit. But if there is a loss, it will all come out of the initial equity and you should be prepared to amke up 40% of any loss on the initial equity.

hedgehopper_2

CLAPTON wrote: »

at first sight 70/30 seems a very unfair split if you are both paying half the mortgage

He's stumping up £50k for the deposit (house is £250k) and I'm basically covering legal fees and other moving costs (around £4k) so in that respect it seemed pretty generous to me! But this is on the assumption that we could change the shares around very easily in maybe 2 years' time when we'll both have been paying equally into the mortgage.

If it's actually tricky to do that then, well, we could have a problem...:-/

puddy

ours is split 70/30 because i have paid the deposit which about 70% of the property, then we pay half the mortgage (well we dont really, but im considering that he pays his half) so the percentage will remain the same

hedgehopper_2

DVardysShadow wrote: »

Although it is not set in stone, if you get the percentage right at the outset, there is nothing to even out.

In the event that we split up in the next two years though (not assumed but we are allowing for all possibilities) I could, to be blunt, get away with financial murder - I don't have the big savings he has so can't contribute to the deposit and in actual terms, my contribution up-front is tiny.

I wouldn't dream of doing that, but I do understand the need to protect against that possibility and can see why he wants to.

If you split and sell, this should work out fine as long as there is a profit. But if there is a loss, it will all come out of the initial equity and you should be prepared to amke up 40% of any loss on the initial equity.

Hm, I see. Impossible to predict I guess.

I had initially suggested a 40-60 split but he just couldn't square it with the deposit business.

hedgehopper_2

puddy wrote: »

ours is split 70/30 because i have paid the deposit which about 70% of the property, then we pay half the mortgage (well we dont really, but im considering that he pays his half) so the percentage will remain the same

Interesting, thanks. So are you saying you personally paid a very high percentage deposit? In that instance I can see how you'd feel you already own that percentage outright, and he'll never 'make it up' with repayments.

Ours is 20%, so not massive, relatively speaking...

puddy

no, but you dont 'make it up' with payments, the percentage stays the same

eg

house bought for 136

mortgage for 66 (both equally liable)

so deposit 70k which is just under half

but equally liable for mortgage so 70 plus 33, = 103, leaving the other share 33 , so about 70/30. ignore interest etc. thats on the basis of him paying equally, even though thats not the case, i consider it is. you also ignore interest and any possible raise or deficit as you can only go on the figures you have now

DVardysShadow

hedgehopper wrote: »

... I had initially suggested a 40-60 split but he just couldn't square it with the deposit business.

60-40 is correct for 20% deposit

hedgehopper wrote: »

... Ours is 20%, so not massive, relatively speaking...

Which is what applies. Don't settle for less than 60-40. At 70-30, the mortgage should be split 50-30.

hedgehopper_2

OK folks sorry to be a pain as the above advice is very helpful BUT, if we did decide we felt more comfortable making it 30-70 or whatever for the first two years then made it more equal later on, is that IN ITSELF likely to be a problematic process? I see this as being the most likely scenario.

thanks again
HH