Shared mortgage calculator

eightwayliz

Is there such a thing?

I'm talking about where 2 people buy together but in unequal proportions, eg

1) One person puts in a larger deposit but the other pays more per month off the mortgage, and they own the property 50/50

2) As above but with a different split, say 60/40

How do you work out what the monthly payments break down to, given a known deposit for each person and a known split required?

louisdog

I don't know of any calculator, but for your first example (50/50 ownership) I think you just need to work out what percentage of the house the deposit equates to, and then you can calculate the proportion of the mortgage payment they'd need to pay.

For example a £100,000 house, and the deposit is £33,000. So they already own 33% outright so they only need to pay mortgage for 17%, the mortgage is for 67% (100 - 33) so they need to pay 17/67, which works out at 25%, of the monthly mortgage repayment.

If you had any example figures perhaps someone could calculate the amounts for your two (50/50 and 60/40) scenarios, then you'll see mor eclearly how it's done. The example above is silly really as it uses a £100,000 house which makes the figures easy.

LisaT186

I think OP is trying to say that of that £33,000 person one puts down £25,000 and person 2 puts in £8,000, how much of the monthly mortgage payment should each make, to make them 50:50 partners in the property?

Haven't got my head round how to work it out yet though!

louisdog

Aha ok. In that case I think the calc is still the same:-

Total deposit is 33% of the house. Mortgage is on 67% of house.

Person 1 pays £25000 of the deposit owns 25% and to make sure they are contributing to their 50% share needs to pay 25/67ths of the mortgage i.e. 37% of it.

Person 2 pays £8000 so they own 8% and need to pay 42/67ths of the mortgage i.e. 63% of it.

and with a 60/40 share it'd be similar maths:-

Person 1 pays £25000 of the deposit owns 25% and to make sure they are contributing to their 60% share needs to pay 35/67ths of the mortgage i.e. 52% of it.

Person 2 pays £8000 so they own 8% and to make up their 40% need to pay (40-8)/67ths of the mortgage i.e. 32/67 = 48% of it.

HTH! I am pretty sure it's right but not very good at explaining it!

eightwayliz

All useful so far...

Let's give it a bit of context. Say I am buying with a friend. He has £30k to put in, I have £10k. We decide what proportions we want to own the house in and start paying monthly mortgage repayments accordingly. Then x years into the 25year term we want to sell up and buy separate places. If we had completed the 25 years then we could just sell and split proceeds 50/50 (or whatever split we'd agreed). But what happens before that point?

What if you want to overpay on the mortgage, would you have to both agree to overpay by same amount (or same proportion)?

With more and more people buying with their friends these days, if someone was to design a calculator then I'm sure it would be very useful...

louisdog

OK so the formula for working out the proportion of the mortage payment that a person should pay:-

m1 =

((Txp1)-d1)
__________ x m
(T-(d1+d2))

where:

T = total cost of house
m = monthly mortgage payment
d1 and d2 are person 1 and person 2's deposit amounts
m1 and m2 are the amounts of the monthly mortgage payment that they pay

If you buy with a friend and decide proportions upfront, put in your deposits, then stick to paying proportions of the monthly mortgage determined by the above, then the equity left in the house should be split according to your proportions, regardless of when you sell up.

I am not sure how overpayments would work - if you made overpayments in line with your proportions of ownership (e.g. in the 60/40 case one pays £600 and one £400) then that would work and not mess things up, but otherwise I don't know how you'd work it out.

HTH

eightwayliz

What's p1?

Also, I'm not sure what you say about selling up at any time holds true. Say one person puts in £20k deposit and the other puts in £10k but the split is to be 50/50 and the mortgage payments are adjusted accordingly... then you sell after a very short time - the person who put in the smaller deposit won't yet have made up for it in larger mortgage repayments?

Generali

It's not possible to work out the equivalent amounts each should pay towards the house in monthly payments to make the 'correct' split 50/50 with different deposits until you know how long the house will be owned for.

louisdog

Yep you're right sorry - you can't sell up at any time as it won't be fair on the person who put the larger deposit down.

p1 is the percentage of the house that the first person wants to own e.g. if they were to won 60%, p1 is 0.6.