Tenants in Common & Declaration of Trust

cpbryan

Hello all

Apologies if this has already been asked but I haven't been able to find the answer to my specific question and am finding it quite confusing!

I have read how common it is for unmarried couples to buy houses together and apportion shares based on the amount of deposit contributed… e.g if one person puts in a deposit of £40k and another of £60k, the ownership is essentially split 40-60 by creating a Declaration of Trust and buying the property as Tenants in Common (rather than Joint Tentants). This seems to make a lot of sense if you split up in the coming years.

My question is: What happens if one person puts in the whole deposit of £100k? This is the case with me and my boyfriend – he received some inheritance, while I have no savings. Obviously it is fair to recognise that his financial input is greater but surely the ownership can’t be 100-0 if I contribute to the mortgage payments?

The house is worth 300k and we will both be contributing to the monthly outgoings equally. So in theory then his input will be 200k and my 100k.

If we sell the property and the value has gone up to £400k (would that be nice!) would the shares be split proportionate to the input? For example…
£133k deposit returned to him (33%)
£133k his share (33%)
£133k my share (33%)

Or would it be split 50-50 on everything over the deposit amount put in? For example…
£100k deposit returned to him (25%)
£150k his share (37.5%)
£150k my share (37.5%)

I suppose our query is, will he always own 66% of the property, or will I gradually increase my share by contributing equally to the mortgage?

We’re also not entirely sure whether the Declaration of Trust is superseded my marriage, or whether it continues alongside it. And then, if I have to take time off work to have children, my mortgage contributions will decrease, so will my share do the same? Perhaps we would just review the Declaration again in 5 or 10 years time.

It all seems very confusing, and we know we're in quite a fortunate situation, but we want to make sure we get this right. Any help or guidance would be very very welcome!
Many thanks in advance

getmore4less

The deposit(s) buys part of the house the mortgage the rest

eg. 100k house 30k deposit 70k mortgage.

if you split the mortgage 50:50 you own 65:35

When you sell you get your share then pay back 1/2 the mortgage each.

if you change the share of the mortgage you can change the shares of ownership.

Whatever % the ownership you pay those share to any capital projects.

What ever the share of the debt thats the share you pay same for overpayments.

This works for every value of deposit and mortgage and price rise/fall.
Most other ways people do it do not work for all values.

The other common one is you get your deposit back, that is the same as an interest free loan to the other person for 1/2 your input.

You need to go through every exit senario and decide what the stratagy will be, deaths, split up, just want to not have the place any more, loss or one or both income ....


remeber purchase includes all the costs so factor those in as well.

selling is after all costs but not the mortgage that comes out of the share of the equity.


There is a risk that if the price drops or does not go up enough to cover the costs you can end up with a debt to each other. THis risk has not been factored in.

getmore4less

One other thing seperare out the cost of running the place from the buying of the place.

Think of it as a house share with no rent, and split the household costs as if you rented.

anything that would normaly be done by the landlord gets done/paid for as if you were the landlords split at the %ownership.


Don't mix the teo together