Deed of trust calculation

tipsymcstagger

Hello all,

My fiance is going to come onto my mortgage with me. I have 118,000 outstanding on my home. It's worth 150,000. I am going to have a deed of trust made up and was wondering what calculations to use to protect this equity.

Thanks in advance

DVardysShadow

Is your fianc! bringing any equity? How are you planning to pay the mortgage between you?

tipsymcstagger

no hes not bringing in any equity and mortgage payments will be 50/50

getmore4less

He will own 59/150 worth you 91/150 worth.

Thrugelmir

Draw up an agreement which reflects your equity i.e. £30k. This amount is then deducted from the net proceeds upon sale of the property. The remainder is then shared 50/50.

DVardysShadow

Thrugelmir wrote: »

Draw up an agreement which reflects your equity i.e. £30k. This amount is then deducted from the net proceeds upon sale of the property. The remainder is then shared 50/50.

OP has a choice here. She has 32/150 of the property or £30,000 as equity at this moment. It is the same thing.

But later, if the trust deed has to be invoked, these will not be the same thing. If house prices go up, it would be better for OP to claim 32/150 as equity now. Whereas if they go down, it is better to claim £30,000.

The thread How to split house & mortgage 3 ways when 1 person isn't contributing toward deposit? covers much the same ground only for 3 people. Their decision is to freeze the equity into the trust deed as a fraction of the property value rather than as cash.

Either way, you need to make your fiance aware that as he is bringing no equity, if house prices have dropped should it be necessary to invoke the trust deed, he may end up out of pocket, because he is effectively on 100% mortgage.

getmore4less

Thrugelmir wrote: »

Draw up an agreement which reflects your equity i.e. £30k. This amount is then deducted from the net proceeds upon sale of the property. The remainder is then shared 50/50.

That is not a fare way to do it