Shared Home Ownership with Partner

sjh1978

cte1111 wrote: »

I'm with annasele, the simple and fair way to do it is to own the house as tenants in common with her owning a third and you owning two thirds. Then if you decide to sell in the future then you split the equity in those proportions.

When you buy the house, your deposit has paid for 1/6, your partner's deposit has paid for 1/12 and the bank owns the remaining 9/12.

I hope it is just the way it is coming over on the internet, but it does sound a bit like you want to treat the woman you love like a lodger who is funding your social life with her 'rent' rather than your partner with whom you want to share everything.

From your calculations, you are only treating her contribution to the deposit as a hold on the house, but not her further monthly contributions which are paying a big chunk of the mortgage.

Yes, it is the way coming over the internet - apologies if it was sounding a bit blase - we do love each other very much, and of course the social fund will be spent on pampering her silly!

I accept the simple third/two thirds arrangement - that certainly would be the easiest thing to do. However, as i mentioned previously (and because i do love her that much) I want her to be able to build up some additional security in the property. Of course I could say lets just call it 50:50 from the start, but then I lose out if anything happens - honestly we are just trying to be as practical as possible in a harsh world!

I hope you can understand the predicament? Just trying to get the best situation for her; the best situation for me; and more importantly, the best situation for us (and the dog!)

Cheers

S

pippa80

I think it sounds sensible S!

My OH and I bought our first place recently. As more of the deposit was mine we've worked out a percentage that I own and he owns as described by people above. Seems fair and simple.

sjh1978

Thanks Pippa.

If out deposit ratio was more evenly split, i think we could easily live with that ratio as we live our happy life together. However, i think that at best the OH could provide one third as stated. The worst case scenario is that she will not be able to provide anything. The OH is a PhD student at the moment, and doesn't have much in the way of savings.

Perhaps the main emphasis of my OP should have been, that if she can't contribute anything and i put up the initial £60k deposit, how can she build up some form of ownership and what is a fair way of doing this.

I do love her to bits, but I think it would be unwise (again unromantic, but forgive me) to gift a portion of the property over to her - and then how do you work out a fair percentage in doing that. TBH, i dont think she would accept that anyway!

cte1111

OK will do you a formula (knew the maths degree would come in handy one day)

There are 2 issues at stake:
1. how the initial deposit is split betwen you
2. how the subsequent mortgage payments are split between you

Total stake owned by partner 1 = (amount put into initial deposit / purchase price) + (monthly payment amount / total monthly mortgage)

So as long as you and your partner pay a consistent proportion of the mortgage, then you are sorted.

cte1111

So if the house is bought for £200, you put in £40k, your partner put in £5k, then your initial stake would be:
40/200 = 20%
Your partner's initial stake would be 5/200 = 2.5%

Then you need to split the remaining equity by the mortgage proportions, e.g. if you pay 250 and she pays 100, then in addition to your 20% stake, you will 'own' 250/350 * 77.5% (remaining percentage) = 55%.

Clear as mud LOL

cte1111

So if the house was to be sold, you would split any equity between you in the proportions indicated above. Hope that helps!

ViolaLass

You keep talking about how will she build up her equity in the property. I don't understand. If she pays part of the mortgage, she is building up equity in the property. Why is there any need for a more complicated answer than that?

sjh1978

cte1111 wrote: »

So if the house was to be sold, you would split any equity between you in the proportions indicated above. Hope that helps!

Outstanding, thank you very much for this - i shall re-read this a few times and I am sure it will be as clear as snow!

Many thanks

sjh1978

ViolaLass wrote: »

You keep talking about how will she build up her equity in the property. I don't understand. If she pays part of the mortgage, she is building up equity in the property. Why is there any need for a more complicated answer than that?

That's very true, I missed that point! I assume then that the original split would proportionally raise each of our equity in the property until the mortgage is paid off?! Sounds fair enough.

I will try and do some sums based on that, but I think the more general point is that she would want, and I would wan't her, to increase her level of equity at a greater rate than the mortgage repayments would afford, particulary if she puts up zero deposit.

ViolaLass

Thing is, it's one thing to be 'clinical' and want to know who owns how much of the house. It's another to complicate matters by having her buy bits of the house from you and then trying to factor in percentage increases in value.

If she's a PhD student, I can't imagine she'll be earning enough to buy more equity for a while anyway.

If it were me, I would concentrate on getting mortgage paid off first according to whichever split was simplest mathematically e.g. you put in £60k on a £240k house then split the payments equally. Then, when you sell, you get 1/4 of the price and you split the rest between you.

Once the mortgage has been paid off you can consider whether you want to even things up. Sounds a bit pointless personally, if you're being honest when you say you would just spend the money on her. Why not just give her the extra equity then? Maybe X amount per year?