Entitlement

tipsybub

Hi,

Looking for some advice please!

My partner bought a property last year with an approx 54% deposit. It was bought as 'our' house and we have equally split the bills including the mortgage since we moved in.
I am not listed on the mortgage and the reason for this was because buying on his own made him a first time buyer so we could save on fees when purchasing our property. (I already own a seperate property which was purchased before I met him).

We are now having discussions as to who is entitled to what as there is an option of me paying a lump sum off the (his) mortgage.

I believe that as I have been paying 50% of the mortgage and bills since we have lived in the property, I would be entitled to 50% of any increase in value of the house. He believes that as he paid the deposit for the house, he would be entitled to a larger portion of any increase in value and I would be entitled to a lesser amount.

Can anyone advise as to where we both stand?

Thanks in advance!
K

ognum

Wow doesn't sound like a partnership to me, maybe a buisness partner but not a life partner!

tipsybub

maybe I havent written it well. We're not arguing over any of this, we just dont know where we stand!
Surely its better to be able to have this kind of discussion when things are happy than if the worst possible happened and we split up and ended up having to look into things through solicitors?

Its more me trying to work out where my money is best placed now - my property sale has exchanged today and I would like to know my standpoint if I wanted to put more money in the house / get a buy to let / put into savings / travel round the world... - possibilities are endless!

starbarboy

Surely that was covered in the pre-nuptials

On a serious note, I think it would ultimately come down to who has the best lawyer so oh are probably right to consider it now while you both are on good terms.

I'm going to be honest I don't know what a court would decide in the event of a dispute however I can see your partners point. If you were to buy a shared equity property any proceeds from the property would be split according to how much equity each stakeholder has in the property. Having said that, if I believed that I had found my 'forever' partner I'm not sure I would be against splitting everything 50/50 - as is the case in many marriages where one person may earn significantly less than the other for example.

Anyway, good luck whatever the outcome and hope you don't end up having to put the theory into practice.

Stephen

[Deleted User]

Assuming house cost £100,000:

The simplest way is to consider the percentages of the money put in as the percentages of the returns. Your husband put in 54% of the value for the deposit so he gets a 54% return. If there are 100 mortgage payments and the total cost of the mortgage is £80,000 (for £46,000 equity at the time of purchase - 46%) then each mortgage payment is worth 0.46% percent. If you are paying half of the mortgage each that would mean you are earning 0.23% on every payment.

Assuming that you continue this arrange (half each) until the end of the mortgage, you would have put in £400 * 100 = £40,000 which gives you 23% and your husband equal contribution combined with his deposit gives him 77%.

If you decide to pay off a lump sum (in my example figures let's say you pay off £20,000) that would be worth 25 payments, equalling 11.5%.

This is what I think is the most equal arrangement.

An alternative arrangement would be to split the payments, have your husband pay the interest on the mortgage and you pay for the equity portion, you'll spend more but at the end of the mortgage you'll have "bought" 46%.

Personally I would just have an agreement where in the case of a sale your husband gets back the amount that he put in and then any extra is split 50/50.

Tomm20

He should be entitled to 54% of the increase.

You both would then share 50% (half each) each of the remaining 46% increase in value.

As you intend paying a lump sum into the mix, then the percentages would change depending on how much you intend paying off.

ValHaller

I look at it like this:

He put up 54% as cash. The rest was funded via a mortgage of 46%, so you are renting 23% of the money and he is renting 23%. His share is currently 77% and yours is 23%.

You are nor being reasonable expecting 50% of the profit when he is funding 77% of the property.

To take your share to 50%, you need to give him 27% of the value of the property now (value now rather than when you bought - unless you are both happy to use the value when it was bought). You remain responsible for your half of the mortgage as part of your share.

He should use the 27% to pay off his half of the mortgage and it will give him some cash on top. You too should put whatever you have left over to paying down the mortgage.

Annisele

If "partner" means "civil partner", then the starting position is likely to be that both parties get half the assets, regardless of whose name they're in.

If OP isn't married/civil partnered, and the house is entirely in the partner's name, then the starting position is likely to be that OP's partner keeps 100% of the equity. (If they were together when the house was purchased, it's possible the mortgage lender asked the OP to sign something to say they had no claim on the house).

In both cases, a court could move a fair way from the starting position depending on the circumstances. Eg short marriage, OP being able to prove they'd contributed to the mortgage in the belief they'd get equity in the house as a result, and many other things.

If I was the OP, I'd be tempted to try and do a transfer of equity. I'd want the mortgage in both names, and I'd use the money from the sale of my property to pay my partner one half of the deposit (possibly plus interest). Or I might just get married and have done!

tipsybub

We're not currently married but that is another future plan and so again another reason we'd like to know where we stand.
Anyone have much knowledge on the usefullness of a deed of trust? As we arent married and my name isnt on the mortgage or deeds, before I consider paying a lump sum off the mortgage, is it worth getting a deed of trust to safeguard my money if we were to split up as it seems otherwise he could potentially just kick me out and I'd have no claim to get my money back.

I am unsure if the deed of trust is right for us. Now I no longer have my own mortgage there is the option of not only a lump sum payment but also me being able to overpay the mortgage occasionally and i'm wondering if a deed of trust is flexible enough to take this into account?

ValHaller

tipsybub wrote: »

As we arent married and my name isnt on the mortgage or deeds, before I consider paying a lump sum off the mortgage, is it worth getting a deed of trust to safeguard my money

You should make sure that you go on the deeds of the house. You need to do a Transfer of Equity. A deed of Trust is nice to have, but does not get your name on the property title deeds, which in some circumstances could leave you vulnerable.

Cissi

Personally, I wouldn't put any lump sum into the house until you both feel sure enough of each other that you're ready to get married. And then it's my personal view of marriage that everything becomes jointly owned - no matter who has put in how much, who earns more and who gives up more to raise the family etc. DH and I have had joint accounts ever since we got married - it's part and parcel of our partnership. Yes, if we ever were to split up then some things might seem financially "unfair" - but how do you account for years of love and mutual support in £££?

Funnily enough, I have a feeling that with our attitude, we're less likely to split up than couples who keep separate accounts and keep tabs on who owns what, "just in case"...